Modine Manufacturing Co 10-Q for FY2023 Q1
Modine Manufacturing Co (MOD)
10-Q
2022-08-04
For: 2022-06-30
View Original
Added on
April 11, 2026
About this 10-Q
Modine Manufacturing Co filed this 10-Q on August 4, 2022, covering the quarter ended June 30, 2022 (FY2023 Q1).
Headline figures
Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $541M
- up 9.4% from $494.6M a year earlier
- Net income
- $14.3M
- up 521.7% from net income of $2.3M a year earlier
- Diluted EPS
- $0.27
- up 575.0% from $0.04 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2022
or
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
Commission file number 1-1373
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code (262 ) 636-1200
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer ☐
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Non-accelerated Filer ☐
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☑
The number of shares outstanding of the registrant’s common stock, $0.625 par value, was 52,011,473 at July 29, 2022.
MODINE MANUFACTURING COMPANY
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PART I. FINANCIAL INFORMATION
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1
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21
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29
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PART II. OTHER INFORMATION
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30
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PART I. FINANCIAL INFORMATION
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended June 30, 2022 and 2021
(In millions, except per share amounts)
(Unaudited)
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Three months ended June 30,
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2022
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2021
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Net sales
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$
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$
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Cost of sales
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Gross profit
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Selling, general and administrative expenses
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Restructuring expenses
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Impairment charges (reversals) – net
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(
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Loss on sale of assets
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Operating income
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Interest expense
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(
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(
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Other (expense) income – net
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(
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Earnings before income taxes
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Provision for income taxes
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(
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(
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Net earnings
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Net earnings attributable to noncontrolling interest
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(
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Net earnings attributable to Modine
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$
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$
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Net earnings per share attributable to Modine shareholders:
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Basic
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$
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$
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Diluted
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$
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$
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Weighted-average shares outstanding:
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Basic
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Diluted
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended June 30, 2022 and 2021
(In millions)
(Unaudited)
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Three months ended June 30,
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2022
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2021
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Net earnings
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$
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$
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Other comprehensive income (loss), net of income taxes:
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Foreign currency translation
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(
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)
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Defined benefit plans
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Cash flow hedges
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(
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)
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(
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)
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Total other comprehensive income (loss)
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(
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)
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Comprehensive income (loss)
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(
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)
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Comprehensive loss (income) attributable to noncontrolling interest
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(
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)
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Comprehensive income (loss) attributable to Modine
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$
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(
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)
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED
BALANCE SHEETS
June 30, 2022 and March 31, 2022
(In millions, except per share amounts)
(Unaudited)
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June 30, 2022
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March 31, 2022
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ASSETS
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Cash and cash equivalents
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$
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$
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Trade accounts receivable – net
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Inventories
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Other current assets
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Total current assets
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Property, plant and equipment – net
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Intangible assets – net
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Goodwill
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Deferred income taxes
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Other noncurrent assets
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Total assets
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$
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$
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Short-term debt
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$
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$
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Long-term debt – current portion
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Accounts payable
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Accrued compensation and employee benefits
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Other current liabilities
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Total current liabilities
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Long-term debt
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Deferred income taxes
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Pensions
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Other noncurrent liabilities
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Total liabilities
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Commitments and contingencies (see Note 17)
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Shareholders’ equity:
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Preferred stock, $
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Common stock, $
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Additional paid-in capital
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Retained earnings
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Accumulated other comprehensive loss
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(
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(
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Treasury stock, at cost,
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(
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(
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Total Modine shareholders’ equity
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Noncontrolling interest
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Total equity
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Total liabilities and equity
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$
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the three months ended June 30, 2022 and 2021
(In millions)
(Unaudited)
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Three months ended June 30,
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2022
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2021
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Cash flows from operating activities:
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Net earnings
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$
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$
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Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
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Depreciation and amortization
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Impairment charges (reversals) – net
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(
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Loss on sale of assets
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Stock-based compensation expense
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Deferred income taxes
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(
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(
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Other – net
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Changes in operating assets and liabilities:
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Trade accounts receivable
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(
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)
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Inventories
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(
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(
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Accounts payable
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Other assets and liabilities
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(
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Net cash provided by (used for) operating activities
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(
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Cash flows from investing activities:
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Expenditures for property, plant and equipment
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(
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(
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Payments for disposition of assets
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(
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Other – net
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Net cash used for investing activities
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(
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(
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Cash flows from financing activities:
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Borrowings of debt
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Repayments of debt
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(
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(
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Borrowings on bank overdraft facilities – net
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Purchases of treasury stock under share repurchase program
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(
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Dividend paid to noncontrolling interest
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(
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(
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Other – net
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(
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)
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(
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)
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Net cash provided by financing activities
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Effect of exchange rate changes on cash
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(
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)
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Net increase in cash, cash equivalents, and restricted cash
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Cash, cash equivalents, and restricted cash – beginning of period
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Cash, cash equivalents, and restricted cash – end of period
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$
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$
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||||
The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the three months ended June 30, 2022 and 2021
(In millions)
(Unaudited)
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Common stock
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Additional
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Retained
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Accumulated other
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Treasury stock,
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Non-
controlling
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|||||||||||||||||||||||||||
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Shares
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Amount
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paid-in capital
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earnings
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comprehensive loss
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at cost
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interest
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Total
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|||||||||||||||||||||||||
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Balance, March 31,
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
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)
|
$
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$
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|||||||||||||||
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Net earnings
|
-
|
|
|
|
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||||||||||||||||||||||||
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Other comprehensive loss
|
-
|
|
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|
(
|
)
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(
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)
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(
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)
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|||||||||||||||||||||
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Stock options and awards
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||||||||||||||||||||||||
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Purchase of treasury stock
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-
|
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(
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)
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(
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)
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||||||||||||||||||||||
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Stock-based compensation expense
|
-
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Dividend paid to noncontrolling interest
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- | ( |
) | ( |
) | |||||||||||||||||||||||||||
|
Balance, June 30,
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
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|||||||||||||||
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Common stock
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Additional
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Retained
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Accumulated other
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Treasury stock,
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Non-
controlling
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|||||||||||||||||||||||||||
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Shares
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Amount
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paid-in capital
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earnings
|
comprehensive loss
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at cost
|
interest
|
Total
|
|||||||||||||||||||||||||
|
Balance, March 31,
2021
|
|
$
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
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|||||||||||||||
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Net earnings
|
-
|
|
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Other comprehensive income
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-
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Stock options and awards
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||||||||||||||||||||||||
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Purchase of treasury stock
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-
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(
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)
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(
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)
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||||||||||||||||||||||
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Stock-based compensation expense
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-
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Dividend paid to noncontrolling interest
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-
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(
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)
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(
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)
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||||||||||||||||||||||
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Balance, June 30,
2021
|
|
$
|
|
$
|
|
$
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$
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(
|
)
|
$
|
(
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)
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$
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$
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The notes to condensed consolidated financial statements are an integral part of these statements.
MODINE MANUFACTURING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share amounts)
(unaudited)
Note 1: General
The accompanying unaudited condensed consolidated financial statements of Modine Manufacturing Company
(“Modine” or the “Company”) were prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes necessary for a comprehensive presentation of financial position, results of operations and cash flows required by GAAP for complete financial statements. The financial statements include all normal recurring
adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim periods. Results for the first three months of fiscal 2023 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the consolidated financial statements and
related notes in Modine’s Annual Report on Form 10-K for the year ended March 31, 2022.
Disposition of Austrian Air-cooled Automotive Business in Fiscal 2022
On April 30, 2021, the Company sold
its air-cooled automotive business in Austria to Schmid Metall GmbH. As a result of this transaction, the Company recorded a loss of $6.6
million during the first quarter of fiscal 2022, which included the write-off of $1.7 million of net
actuarial losses related to its pension plan. The Company reported this loss within the loss on sale of assets line on the consolidated statement of operations. Upon transaction closing, $5.9 million of cash within the business transferred to the buyer.
In connection with the sale of this business, the Company provided the buyer with a 5 -year, €4.0 million loan facility. The buyer began borrowing
under this facility during the second quarter of fiscal 2022. At both June 30,2022 and March 31, 2022, the Company recorded a €4.0 2.6 percent.
Liquid-Cooled
Automotive Business Held for Sale in Fiscal 2022
The Company previously
agreed to sell its liquid-cooled automotive business. During the first quarter of fiscal 2022, the Company and the prospective buyer modified the transaction perimeter to remove certain manufacturing operations. U.S. GAAP requires companies
to measure asset groups that revert back to held and used classification at the lower of their (i) carrying value, as if held for sale classification had not been met; or (ii) fair value at the date of the decision not to sell. As a result,
the Company evaluated the long-lived assets of these businesses that no longer met the requirements to be classified as held for sale and reversed $7.4
million of previously-recorded impairment charges during the first quarter of fiscal 2022 to adjust the long-lived assets to their estimated fair value. This impairment reversal was partially offset by $5.3 million of impairment charges recorded during the first quarter of fiscal 2022 related to other automotive assets held for sale. The Company reported the net $2.1 million impairment reversal during the first quarter of fiscal 2022 within the impairment charges (reversals) line on the consolidated statement
of operations.
The Company and the
prospective buyer subsequently terminated the sale agreement during the third quarter of fiscal 2022. As a result, the liquid-cooled automotive business reverted back to held and used classification and the Company remeasured its long-lived
assets during the third quarter of fiscal 2022.
Disposition of Previously-Closed Facility in Fiscal 2022
During the first quarter of fiscal 2022, the Company signed a definitive agreement to sell a previously-closed manufacturing facility in the U.S.
As a result, the Company recorded an impairment charge of $0.3 million within the Climate Solutions segment to write down the property
to fair value less costs to sell. During July 2021, the sale was completed and the Company received net cash proceeds of $0.7 million.
Note 2: Revenue Recognition
Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported Building HVAC Systems (“BHVAC”) and
the Commercial and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the previously-reported Heavy Duty Equipment (“HDE”) and Automotive segments and the CIS Coatings
business. See Note 19 for additional segment financial information.
The Company’s segments and their principal revenue-generating activities are as follows:
Climate Solutions
The Climate Solutions segment provides energy-efficient, climate-controlled components and solutions for a wide array of applications. The Climate
Solutions segment principally generates revenue from selling heat transfer products, heating, ventilating, air conditioning, and refrigeration (“HVAC & refrigeration”) products, and data center cooling solutions. Heat transfer products
include heat transfer coils used in commercial and residential HVAC and refrigeration applications. HVAC and refrigeration products include commercial and residential unit heaters, vertical and horizontal unit ventilators, air conditioning
chillers, low global warming potential unit coolers, air-cooled condensers, and dry coolers. Data center cooling solutions, which are integrated with system controls, include air- and liquid-cooled chillers, computer room air conditioner and air
handler units, and fan walls.
Performance Technologies
The Performance Technologies segment provides products and solutions that enhance the performance of customer applications. The Performance
Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial applications. Air-cooled products include radiators, charge air coolers, condensers, and engine cooling modules.
Liquid-cooled products include engine oil coolers, charge air coolers, condensers, and exhaust gas recirculation coolers. In addition, the Performance Technologies segment provides advanced solutions, which are designed to improve battery range
and vehicle life, to zero-emission and hybrid commercial vehicle and automotive customers. These solutions include battery thermal management systems, electronics cooling packages, and battery chillers. The advanced solutions provided by the
segment also include coating products and application services that extend the life of equipment and components by protecting against corrosion.
Disaggregation of Revenue
The table below presents revenue for each of the Company’s operating segments. Each segment’s revenue is disaggregated by product group, by
geographic location and based upon the timing of revenue recognition. The disaggregated revenue information presented in the table below for fiscal 2022 has been recast to be comparable to the current period presentation.
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Three months ended June 30, 2022
|
Three months ended June 30, 2021
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Climate
Solutions
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Performance
Technologies
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Segment
Total
|
Climate
Solutions
|
Performance
Technologies
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Segment
Total
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Product groups:
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Heat transfer
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$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
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HVAC & refrigeration
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Data center cooling
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Air-cooled
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Liquid-cooled
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Advanced solutions
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Inter-segment sales
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Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
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|
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Geographic location:
|
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Americas
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
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|
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Europe
|
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Asia
|
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|
||||||||||||||||||
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Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
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Timing of revenue recognition:
|
||||||||||||||||||||||||
|
Products transferred at a point in time
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Products transferred over time
|
|
|
|
|
|
|
||||||||||||||||||
|
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Contract Balances
Contract assets and contract liabilities from contracts with customers were as follows:
|
June 30, 2022
|
March 31, 2022
|
|||||||
|
Contract assets
|
$
|
|
$
|
|
||||
|
Contract liabilities
|
|
|
||||||
Contract assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling
contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed. The $8.6 million decrease in contract assets during the first three months of fiscal 2023
primarily resulted from a decrease in contract assets for revenue recognized over time.
Contract liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance
obligations under customer contracts, including contracts for customer-owned tooling. The $6.1 million increase in contract liabilities
during the first three months of fiscal 2023 primarily resulted from payments received in advance of the Company’s satisfaction of performance obligations.
Note 3: Fair Value Measurements
Fair value is defined as the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or
liability in an orderly transaction between market participants. Fair value measurements are classified under the following hierarchy:
| • |
Level 1 – Quoted prices for identical instruments in active markets.
|
| • |
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in
which all significant inputs are observable in active markets.
|
| • |
Level 3 – Model-derived valuations in which one or more significant inputs are not observable.
|
When available, the Company uses quoted market prices to determine fair value and classifies such measurements as Level 1. In some cases, where market prices are not
available, the Company uses observable market-based inputs to calculate fair value, in which case the measurements are classified as Level 2. If quoted or observable market prices are not available, the Company determines fair value based upon
valuation models that use, where possible, market-based data such as interest rates, yield curves or currency rates. These measurements are classified as Level 3.
The carrying values of cash, cash equivalents, restricted cash, short-term investments, trade accounts receivable, accounts payable, and short-term debt approximate fair
value due to the short-term nature of these instruments. The fair value of the Company’s long-term debt is disclosed in Note 16.
Note 4: Pensions
Pension cost included the following components:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Service cost
|
$
|
|
$
|
|
||||
|
Interest cost
|
|
|
||||||
|
Expected return on plan assets
|
(
|
)
|
(
|
)
|
||||
|
Amortization of unrecognized net loss
|
|
|
||||||
|
Net periodic benefit cost
|
$
|
|
$
|
|
||||
Our
funding policy is to contribute annually, at a minimum, the amount necessary on an actuarial basis to provide for benefits in accordance with applicable laws and regulations. In connection with funding relief provisions within the American Rescue
Plan Act of 2021, we do no t expect to make cash contributions to our U.S. pension plans during fiscal 2023.
Note 5: Stock-Based Compensation
The Company’s stock-based incentive programs consist of the following: (1) a long-term incentive plan (“LTIP”) for officers and other executives that consists of stock
awards, stock options, and performance-based awards granted for retention and performance, (2) a discretionary equity program for other management and key employees, and (3) stock awards for non-employee directors.
The Company calculates compensation expense based upon the fair value of the instruments at the time of grant and subsequently recognizes expense ratably over the
respective vesting periods of the stock-based awards. The Company recognized stock-based compensation expense of $1.1 million and $1.2 million for the three months ended June 30, 2022 and 2021, respectively.
The fair value of stock-based compensation awards granted during the three months ended June 30, 2022 and
2021 were as follows:
|
Three months ended June 30,
|
||||||||||||||||
|
2022
|
2021
|
|||||||||||||||
|
Shares
|
Fair Value
Per Award
|
Shares
|
Fair Value
Per Award
|
|||||||||||||
|
Stock options
|
|
$
|
|
|
$
|
|
||||||||||
|
Restricted stock awards
|
|
$
|
|
|
$
|
|
||||||||||
In lieu of performance-based stock awards, the Company granted performance cash awards to the LTIP
participants during the first quarter of fiscal 2023. The performance metrics for the cash awards are based upon a target three-year average cash flow return on invested capital and a target three-year average growth in consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”) at the end of the performance period ending March 31, 2025.
The Company used the following assumptions in determining fair value for stock options:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Expected life of awards in years
|
|
|
||||||
|
Risk-free interest rate
|
|
%
|
|
%
|
||||
|
Expected volatility of the Company’s stock
|
|
%
|
|
%
|
||||
|
Expected dividend yield on the Company’s stock
|
|
%
|
|
%
|
||||
As of June 30, 2022, unrecognized compensation expense related to non-vested stock-based compensation
awards, which will be recognized as expense over the remaining service periods, was as follows:
|
Unrecognized
Compensation
Expense
|
Weighted-Average
Remaining Service
Period in Years
|
|||||||
|
Stock options
|
$
|
|
|
|||||
|
Restricted stock awards
|
|
|
||||||
|
Total
|
$
|
|
|
|||||
Note 6: Restructuring Activities
During the first quarter of fiscal 2023, restructuring and repositioning expenses primarily consisted of severance expenses related to targeted headcount reductions in
Europe within the Performance Technologies segment.
During the first quarter of fiscal 2022, restructuring and repositioning expenses primarily consisted
of equipment transfer costs and severance-related expenses within the Performance Technologies segment.
Restructuring and repositioning expenses were as follows:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Employee severance and related benefits
|
$
|
|
$
|
|
||||
|
Other restructuring and repositioning expenses
|
|
|
||||||
|
Total
|
$
|
|
$
|
|
||||
Other restructuring and repositioning expenses primarily consist of equipment transfers and plant consolidation costs.
The Company accrues severance in accordance with its written plans, procedures, and relevant statutory requirements. Changes in accrued severance were as follows:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Additions
|
|
|
||||||
|
Payments
|
(
|
)
|
(
|
)
|
||||
|
Effect of exchange rate changes
|
(
|
)
|
|
|||||
|
Ending balance
|
$
|
|
$
|
|
||||
Note 7: Other Income and Expense
Other income and expense consisted of the following:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Interest income
|
$
|
|
$
|
|
||||
|
Foreign currency transactions (a)
|
(
|
)
|
|
|||||
|
Net periodic benefit cost (b)
|
(
|
)
|
(
|
)
|
||||
|
Total other (expense) income – net
|
$
|
(
|
)
|
$
|
|
|||
| (a) |
|
| (b) |
|
Note 8: Income Taxes
The Company’s effective tax rate for the three months ended June 30, 2022 and 2021 was 25.5 percent and 40.4 percent, respectively. The effective tax rate for the first quarter of fiscal 2023 is lower than
the first quarter of the prior year, primarily due to changes in the mix and amount of foreign and U.S. earnings. The effective tax rate for the first quarter of fiscal 2022 was favorably impacted by a $4.8 million income tax benefit recorded for the release of a valuation allowance in a foreign jurisdiction.
The Company records valuation allowances against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized
in the future. Each quarter, the Company evaluates the probability that its deferred tax assets will be realized and determines whether valuation allowances or adjustments thereto are needed. This determination involves judgement and the use of
significant estimates and assumptions, including expectations of future taxable income and tax planning strategies. In addition, the Company considers the duration of statutory carryforward periods and historical financial results.
Based upon the Company’s analysis as of June 30, 2021, the Company determined it was more likely than not that the deferred tax assets in a foreign jurisdiction will be
realized. As a result, the need for the valuation allowance recorded thereon was eliminated and the Company recorded an income tax benefit of $4.8 million during the
first quarter of fiscal 2022. The Company’s analysis included consideration of the transaction perimeter modification for the liquid-cooled automotive business and the related impairment reversal; see Note 1 for additional information.
At June 30, 2022, valuation allowances against deferred tax assets in the U.S. and in certain foreign
jurisdictions totaled $82.8 million and $26.4 million, respectively. The Company will maintain the valuation allowances in each applicable tax jurisdiction until it determines it is more likely
than not the deferred tax assets will be realized, thereby eliminating the need for a valuation allowance. Future events or circumstances, such as lower taxable income or unfavorable changes in the financial outlook of the Company’s operations in
certain foreign jurisdictions, could necessitate the establishment of further valuation allowances.
Accounting policies for interim reporting require the Company to adjust its effective tax rate each
quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The
Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. The Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate
methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions. The Company does not anticipate a significant change in unrecognized tax
benefits during the remainder of fiscal 2023.
Note 9: Earnings Per Share
The components of basic and diluted earnings per share were as follows:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Net earnings attributable to Modine
|
$
|
|
$
|
|
||||
|
Weighted-average shares outstanding – basic
|
|
|
||||||
|
Effect of dilutive securities
|
|
|
||||||
|
Weighted-average shares outstanding – diluted
|
|
|
||||||
|
Earnings per share:
|
||||||||
|
Net earnings per share – basic
|
$
|
|
$
|
|
||||
|
Net earnings per share – diluted
|
$
|
|
$
|
|
||||
For the three months ended June 30, 2022, the calculation of diluted earnings per share excluded 0.9 million and 0.5 million stock options and restricted stock awards, respectively, because they were anti-dilutive.
For the three months ended June 30, 2021, the calculation of diluted earnings per share excluded 0.3 million and 0.2 million stock options and restricted stock awards, respectively, because they were anti-dilutive.
Note 10: Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following:
|
June 30, 2022
|
March 31, 2022
|
|||||||
|
Cash and cash equivalents
|
$
|
|
$
|
|
||||
|
Restricted cash
|
|
|
||||||
|
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
||||
Restricted cash, which is reported within other current assets and other noncurrent assets in the consolidated balance sheets, consists primarily of deposits for
contractual guarantees or commitments required for rents, import and export duties, and commercial agreements.
Note 11: Inventories
Inventories consisted of the following:
| |
June 30, 2022
|
March 31, 2022
|
||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work in process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
Total inventories
|
$
|
|
$
|
|
||||
Note 12: Property, Plant and Equipment
Property, plant and equipment, including depreciable lives, consisted of the following:
|
June 30, 2022
|
March 31, 2022
|
|||||||
|
Land
|
$
|
|
$
|
|
||||
|
Buildings and improvements (
|
|
|
||||||
|
Machinery and equipment (
|
|
|
||||||
|
Office equipment (
|
|
|
||||||
|
Construction in progress
|
|
|
||||||
|
|
|
|||||||
|
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
|
Net property, plant and equipment
|
$
|
|
$
|
|
||||
Note 13: Goodwill and Intangible Assets
The following table presents a rollforward of the carrying value of goodwill from March 31, 2022 to June 30, 2022. The Company has recast the March 31, 2022 goodwill balances to be comparable with the current segment
structure. There was no impact to the underlying reporting units as a result of the segment realignment during the first quarter of fiscal 2023.
|
Climate
Solutions
|
Performance
Technologies
|
Total
|
||||||||||
|
Goodwill, March 31,
2022
|
$
|
|
$
|
|
$
|
|
||||||
|
Effect of exchange rate changes
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Goodwill, June 30,
2022
|
$
|
|
$
|
|
$
|
|
||||||
Intangible assets consisted of the following:
|
June 30, 2022
|
March 31, 2022
|
|||||||||||||||||||||||
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
Gross
Carrying
Value
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
|||||||||||||||||||
|
Customer relationships
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
|
Trade names
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
|
Acquired technology
|
|
(
|
)
|
|
|
(
|
)
|
|
||||||||||||||||
|
Total intangible assets
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||
The Company recorded amortization expense of $2.0 million and $2.1
million for the three months ended June 30, 2022 and 2021,
respectively. The Company estimates that it will record $6.0 million of amortization
expense during the remainder of fiscal 2023 and approximately $8.0
Note 14: Product Warranties
Changes in accrued warranty costs were as follows:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Beginning balance
|
$
|
|
$
|
|
||||
|
Warranties recorded at time of sale
|
|
|
||||||
|
Adjustments to pre-existing warranties
|
(
|
)
|
(
|
)
|
||||
|
Settlements
|
(
|
)
|
(
|
)
|
||||
|
Effect of exchange rate changes
|
(
|
)
|
|
|||||
|
Ending balance
|
$
|
|
$
|
|
||||
Note 15: Leases
Lease Assets and Liabilities
The following table provides a summary of leases recorded on the consolidated balance sheets.
|
|
Balance Sheet Location
|
June 30, 2022
|
March 31, 2022
|
|||||||
|
Lease Assets
|
||||||||||
|
Operating lease ROU assets
|
|
$
|
|
$
|
|
|||||
|
Finance lease ROU assets (a)
|
|
|
|
|||||||
|
Lease Liabilities
|
||||||||||
|
Operating lease liabilities
|
|
$
|
|
$
|
|
|||||
|
Operating lease liabilities
|
|
|
|
|||||||
|
Finance lease liabilities
|
|
|
|
|||||||
|
Finance lease liabilities
|
|
|
|
|||||||
| (a) |
|
Components of Lease Expense
The components of lease expense were as follows:
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Operating lease expense (a)
|
$
|
|
$
|
|
||||
|
Finance lease expense:
|
||||||||
|
Depreciation of ROU assets
|
|
|
||||||
|
Interest on lease liabilities
|
|
|
||||||
|
Total lease expense
|
$
|
|
$
|
|
||||
| (a) |
|
Note 16: Indebtedness
Long-term debt consisted of the following:
|
_
|
Fiscal year of
maturity
|
June 30, 2022
|
March 31, 2022
|
||||||
|
Term loans
|
|
$
|
|
$
|
|
||||
|
Revolving credit facility
|
|
|
|
||||||
|
|
|
|
|
||||||
|
|
|
|
|
||||||
|
Other (a)
|
|
|
|||||||
|
|
|
||||||||
|
Less: current portion
|
(
|
)
|
(
|
)
|
|||||
|
Less: unamortized debt issuance costs
|
(
|
)
|
(
|
)
|
|||||
|
Total long-term debt
|
$
|
|
$
|
|
|||||
| (a) |
|
Long-term debt, including the current portion of long-term debt, matures as follows:
|
Fiscal Year
|
||||
|
Remainder of 2023
|
$
|
|
||
|
2024
|
|
|||
|
2025
|
|
|||
|
2026
|
|
|||
|
2027
|
|
|||
|
2028 & beyond
|
|
|||
|
Total
|
$
|
|
||
The Company maintains a credit agreement with a syndicate of banks that provides for a multi-currency $250.0 million revolving credit facility expiring in June 2024. In addition, this credit agreement provides for both U.S. dollar- and euro-denominated
term loan facilities and shorter-duration swingline loans. Borrowings under the revolving credit, swingline and term loan facilities bear interest at a variable rate based upon the applicable reference rate and including a margin percentage
dependent upon the Company’s leverage ratio, as described below. At June 30, 2022, the weighted-average interest rates for revolving credit facility borrowings and the term loans were 2.8 and 3.4 percent, respectively. Based upon the terms of the credit agreement, the Company classifies borrowings under its revolving credit and swingline facilities as long-term and short-term debt, respectively, on its
consolidated balance sheets.
At June 30, 2022, the Company’s borrowings under its revolving credit and swingline facilities totaled $81.7
million and $4.0 million, respectively, and domestic letters of credit totaled $5.4 million. As a result, available borrowing capacity under the Company’s revolving credit facility was $158.9 million as of June 30, 2022. At March 31, 2022, the Company’s borrowings under its revolving credit and swingline facilities totaled $64.9 million and $7.0 million,
respectively.
The
Company also maintains credit agreements for its foreign subsidiaries. The outstanding short-term borrowings related to these foreign credit agreements totaled $2.5 million at June 30, 2022. There were $0.7 million of short-term borrowings related to these
foreign credit agreements at March 31, 2022.
Provisions in the Company’s credit agreement, Senior Note agreements, and various foreign credit agreements require the Company to maintain compliance with various
covenants and include certain cross-default clauses. Under its primary debt agreements in the U.S., the Company has provided liens on substantially all domestic assets. Also, as specified in the credit agreement, the term loans may require
prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, the Company is required to represent to the lenders that there has been no material adverse effect, as
defined in the credit agreement, on its business, property, or results of operations.
The leverage ratio covenant requires the Company to limit its consolidated indebtedness, less a portion of its cash balances, both as defined by the credit agreements, to
no more than times consolidated net earnings before interest, taxes, depreciation, amortization, and certain other
adjustments (“Adjusted EBITDA”.) The Company is also subject to an interest expense coverage ratio covenant, which requires the Company to maintain Adjusted EBITDA of at least three times consolidated interest expense. As of June 30, 2022, the Company was in compliance with its debt covenants; its leverage ratio and interest coverage ratio were 2.1 and 12.0 , respectively.
The Company estimates the fair value of long-term debt using discounted future cash flows at rates offered to the Company for similar debt instruments of comparable
maturities. As of June 30, 2022 and March 31, 2022, the carrying value of the Company’s long-term debt approximated fair value, with the exception of the Senior Notes, which had an aggregate fair value of $133.2 million and $138.9 million, respectively. The fair value of
the Company’s long-term debt is categorized as Level 2 within the fair value hierarchy. Refer to Note 3 for the definition of a Level 2 fair value measurement.
Note 17: Risks, Uncertainties, Contingencies and Litigation
COVID-19 Pandemic and Supply Chain Disruptions
The COVID-19 pandemic and other market and economic dynamics have contributed to ongoing global supply
chain challenges and inflationary market conditions. Since the fourth quarter of fiscal 2022, the military conflict between Russia and Ukraine and the related sanctions imposed by governments in the U.S. and abroad have also impacted these
market conditions, particularly driving higher oil and gas prices. The Company is focused on mitigating the negative impacts of labor shortages, supply chain challenges and inflationary market conditions, including rising raw material and
logistic prices as well as delays and shortages in certain purchased commodities and components.
At this time, the Company cannot
reasonably estimate the full impact of the COVID-19 pandemic or the ongoing supply chain challenges and other related economic or market dynamics. If the Company, its suppliers, or its customers experience prolonged shutdowns or other significant
business disruptions, it is possible that the Company’s ability to conduct business in the manner and on the timelines presently planned could be materially and negatively impacted, which could have a material adverse effect on the Company’s
business, financial position, results of operations and cash flows.
Environmental
The Company has recorded environmental investigation and remediation accruals related to manufacturing
facilities in the U.S., one of which the Company currently owns and operates, and a former manufacturing facility in the Netherlands. These accruals primarily relate to soil and groundwater contamination at facilities where past operations
followed practices and procedures that were considered acceptable under then-existing regulations, or where the Company is a successor to the obligations of prior owners, and current laws and regulations require investigative and/or remedial work
to ensure sufficient environmental compliance. In instances where a range of loss can be reasonably estimated for a probable environmental liability, but no amount within the range is a better estimate than any other amount, the Company accrues
the minimum of the range. The Company’s accruals for environmental matters totaled $18.8 million and $18.2 million as of June 30, 2022 and March 31, 2022, respectively. During the first three months
of fiscal 2023 and 2022, the Company increased its remediation accrual related to a former manufacturing facility in the U.S. by $1.0
million and $3.4 million, respectively. As additional information becomes available regarding the environmental matters, the Company will
re-assess the liabilities and revise the estimated accruals, if necessary. While it is possible that the ultimate environmental remediation costs may be in excess of amounts accrued, the Company believes, based upon currently available information,
that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on its financial position. However, these matters are subject to inherent uncertainties, and unfavorable outcomes could occur,
including significant monetary damages.
Other Litigation
In the normal course of business, the Company and its subsidiaries are named as defendants in various lawsuits and enforcement proceedings by private parties, governmental
agencies and/or others in which claims are asserted against Modine. The Company believes that any additional loss in excess of amounts already accrued would not have a material effect on the Company’s consolidated balance sheet, results of
operations, and cash flows. In addition, management expects that the liabilities which may ultimately result from such lawsuits or proceedings, if any, would not have a material adverse effect on the Company’s financial position.
Note 18: Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive loss were as follows:
|
Three months ended June 30, 2022
|
||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||
|
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Other comprehensive income (loss) before reclassifications
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
Reclassifications:
|
||||||||||||||||
|
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
||||||||||||
|
Realized gains – net (b)
|
-
|
-
|
(
|
)
|
(
|
)
|
||||||||||
|
Income taxes
|
|
|
|
|
||||||||||||
|
Total other comprehensive income (loss)
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
||||
|
Three months ended June 30, 2021
|
||||||||||||||||
|
Foreign
Currency
Translation
|
Defined
Benefit
Plans
|
Cash Flow
Hedges
|
Total
|
|||||||||||||
|
Beginning balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
|
Other comprehensive income before reclassifications
|
|
|
|
|
||||||||||||
|
Reclassifications:
|
||||||||||||||||
|
Amortization of unrecognized net loss (a)
|
-
|
|
-
|
|
||||||||||||
|
Unrecognized net pension loss in disposed business (c)
|
- | - | ||||||||||||||
|
Realized gains – net (b)
|
-
|
-
|
(
|
)
|
(
|
)
|
||||||||||
|
Income taxes
|
|
|
|
|
||||||||||||
|
Total other comprehensive income
|
|
|
(
|
)
|
|
|||||||||||
|
Ending balance
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
|||||
| (a) |
|
| (b) |
|
| (c) |
|
Note 19: Segment Information
Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported BHVAC and CIS segments, with the
exception of CIS Coatings. The Performance Technologies segment includes the previously-reported HDE and Automotive segments and the CIS Coatings business. See Note 2 for information regarding the primary operating activities of each segment.
The Company’s new segment structure aligns businesses serving similar or complimentary end markets, products and technologies under common segment management. The Company expects this simplified segment structure will allow it to better focus
resources on targeted growth opportunities and allow for a more efficient application of 80/20 principles across all product lines to optimize profit margins and cash flow. The segment realignment had no impact on the Company’s consolidated
financial position, results of operations, and cash flows. Segment financial information for the prior periods has been recast to conform to the current presentation.
The following is a summary of net sales, gross profit and operating income by segment:
|
Three months ended June 30,
|
||||||||||||||||||||||||
|
2022
|
2021
|
|||||||||||||||||||||||
|
External Sales
|
Inter-segment
Sales
|
Total
|
External Sales
|
Inter-segment
Sales
|
Total
|
|||||||||||||||||||
|
Net sales:
|
||||||||||||||||||||||||
|
Climate Solutions
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Performance Technologies
|
|
|
|
|
|
|
||||||||||||||||||
|
Segment total
|
|
|
|
|
|
|
||||||||||||||||||
|
Corporate and eliminations
|
-
|
(
|
)
|
(
|
)
|
-
|
(
|
)
|
(
|
)
|
||||||||||||||
|
Net sales
|
$
|
541.0
|
$
|
-
|
$
|
|
$
|
494.6
|
$
|
-
|
$
|
|
||||||||||||
|
Three months ended June 30,
|
||||||||||||||||
|
2022
|
2021
|
|||||||||||||||
|
_$’s
|
% of sales
|
_$’s
|
% of sales
|
|||||||||||||
|
Gross profit:
|
||||||||||||||||
|
Climate Solutions
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Performance Technologies
|
|
|
%
|
|
|
%
|
||||||||||
|
Segment total
|
|
|
%
|
|
|
%
|
||||||||||
|
Corporate and eliminations
|
|
|
|
|
||||||||||||
|
Gross profit
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
|
Three months ended June 30,
|
||||||||
|
2022
|
2021
|
|||||||
|
Operating income:
|
||||||||
|
Climate Solutions
|
$
|
|
$
|
|
||||
|
Performance Technologies
|
|
|
||||||
|
Segment total
|
|
|
||||||
|
Corporate and eliminations
|
(
|
)
|
(
|
)
|
||||
|
Operating income
|
$
|
|
$
|
|
||||
The following is a summary of segment
assets, comprised entirely of trade accounts receivable and inventories, and other assets:
|
June 30, 2022
|
March 31, 2022
|
|||||||
|
Assets:
|
||||||||
|
Climate Solutions
|
$
|
|
$
|
|
||||
|
Performance Technologies
|
|
|
||||||
|
Other (a)
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
| (a) |
|
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
When we use the terms “Modine,” “we,” “us,” the “Company,” or “our” in this report, we are referring to Modine Manufacturing Company. Our fiscal year ends on March 31 and, accordingly, all references to quarters refer to our fiscal quarters.
The quarter ended June 30, 2022 was the first quarter of fiscal 2023.
Supply Chain Disruptions and COVID-19 Pandemic
Market and economic dynamics, including the impacts of the COVID-19 pandemic, have contributed to global supply chain challenges and inflationary market conditions. Since the fourth quarter of fiscal 2022, the military conflict between Russia
and Ukraine and the related sanctions imposed by governments in the U.S. and abroad have also impacted these market conditions, particularly driving higher oil and gas prices. We, like many companies, have experienced labor shortages and negative
impacts from supply chain challenges, including rising prices for raw materials and logistics, as well as delays and shortages in certain commodities and components we purchase from suppliers. We are focused on mitigating the negative impacts of
these supply chain challenges and inflationary market conditions. We have implemented selling price increases for many of our products in response to raw material and other price increases and are engaged with suppliers to ensure availability of
key raw materials.
During the fourth quarter of fiscal 2022, COVID-19 cases increased in many areas in China and as a result of government-required lock-downs, we suspended production at manufacturing facilities in China for portions of March and April 2022.
Customer demand in China was also negatively impacted during the first quarter of fiscal 2023 by the lock-downs and supply chain challenges. Market conditions have improved and our plants in China have increased production levels and are currently
operating at normal capacity.
We expect temporary disruptions due to illness-related employee absences and the pressures associated with supply chain challenges will continue, at least in the near term. We cannot reasonably estimate the full impact that the COVID-19
pandemic or the ongoing supply chain challenges and other related economic or market dynamics will have on our business, results of operations, or cash flows in the future.
First Quarter Highlights
Net sales in the first quarter of fiscal 2023 increased $46.4 million, or 9 percent, from the first quarter of fiscal 2022, primarily due to higher sales in our Climate Solutions and Performance Technologies segments. Cost of sales increased
$36.2 million, or 9 percent, primarily due to higher raw material prices, including underlying metal prices and related premiums, fabrication, freight, and packaging costs, and higher sales volume. Gross profit increased $10.2 million and gross
margin improved 60 basis points to 15.4 percent. Selling, general and administrative (“SG&A”) expenses decreased $3.1 million, primarily due to lower environmental charges and costs associated with our review of strategic alternatives for our
automotive businesses. Operating income of $25.6 million during the first quarter of fiscal 2023 increased $16.9 million from the prior year, primarily due to higher earnings in our Climate Solutions segment.
CONSOLIDATED RESULTS OF OPERATIONS
The following table presents our consolidated financial results on a comparative basis for the three months ended June 30, 2022 and 2021:
|
Three months ended June 30,
|
||||||||||||||||
|
2022
|
2021
|
|||||||||||||||
|
(in millions)
|
$’s
|
% of sales
|
$’s
|
% of sales
|
||||||||||||
|
Net sales
|
$
|
541.0
|
100.0
|
%
|
$
|
494.6
|
100.0
|
%
|
||||||||
|
Cost of sales
|
457.6
|
84.6
|
%
|
421.4
|
85.2
|
%
|
||||||||||
|
Gross profit
|
83.4
|
15.4
|
%
|
73.2
|
14.8
|
%
|
||||||||||
|
Selling, general and administrative expenses
|
56.3
|
10.4
|
%
|
59.4
|
12.0
|
%
|
||||||||||
|
Restructuring expenses
|
1.5
|
0.3
|
%
|
0.3
|
0.1
|
%
|
||||||||||
|
Impairment charges (reversals) – net
|
-
|
-
|
(1.8
|
)
|
-0.4
|
%
|
||||||||||
|
Loss on sale of assets
|
-
|
-
|
6.6
|
1.3
|
%
|
|||||||||||
|
Operating income
|
25.6
|
4.7
|
%
|
8.7
|
1.8
|
%
|
||||||||||
|
Interest expense
|
(4.1
|
)
|
-0.8
|
%
|
(4.2
|
)
|
-0.8
|
%
|
||||||||
|
Other (expense) income – net
|
(2.3
|
)
|
-0.4
|
%
|
0.2
|
-
|
||||||||||
|
Earnings before income taxes
|
19.2
|
3.5
|
%
|
4.7
|
1.0
|
%
|
||||||||||
|
Provision for income taxes
|
(4.9
|
)
|
-0.9
|
%
|
(1.9
|
)
|
-0.4
|
%
|
||||||||
|
Net earnings
|
$
|
14.3
|
2.6
|
%
|
$
|
2.8
|
0.6
|
%
|
||||||||
First quarter net sales of $541.0 million were $46.4 million, or 9 percent, higher than the first quarter of the prior year, primarily due to favorable commercial pricing, including adjustments in response to raw material price increases, and
higher sales volume in our Climate Solutions segment. These increases were partially offset by a $26.6 million unfavorable impact of foreign currency exchange rates. Sales in the Climate Solutions and Performance Technologies segments increased
$37.9 million and $7.2 million, respectively.
First quarter cost of sales increased $36.2 million, or 9 percent, primarily due to higher raw material prices, which increased approximately $34.0 million, and higher sales volume. These increases were partially offset by a $23.1 million
favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 60 basis points to 84.6 percent, primarily due to the favorable impact of higher sales volume and favorable commercial pricing, partially offset
by higher material, labor and other inflationary costs.
As a result of higher sales and lower cost of sales as a percentage of sales, first quarter gross profit increased $10.2 million and gross margin improved 60 basis points to 15.4 percent.
First quarter SG&A expenses decreased $3.1 million, primarily driven by lower costs and charges at Corporate and a $2.2 million favorable impact of foreign currency exchange rates. Compared with the prior year, environmental charges related
to a previously-closed manufacturing facility in the U.S., costs associated with our review of strategic alternatives for our automotive businesses, and strategic reorganization costs recorded at Corporate decreased $2.3 million, $1.8 million, and
$0.6 million, respectively. These decreases were partially offset by higher compensation-related expenses, which increased approximately $2.0 million and, to a lesser extent, increases in other general and administrative expenses that have been
impacted by inflationary market conditions.
Restructuring expenses of $1.5 million in the first quarter of fiscal 2023 increased $1.2 million compared with the first quarter of fiscal 2022, primarily due to higher severance expenses in the Performance Technologies segment.
The net impairment reversal of $1.8 million in the first quarter of fiscal 2022 was driven by a $2.1 million net impairment reversal recorded in the Performance Technologies segment, which primarily related to assets held for sale in our
liquid-cooled automotive business. This net impairment reversal was partially offset by a $0.3 million impairment charge in the Climate Solutions segment related to a previously-closed facility.
We sold our air-cooled automotive business in Austria on April 30, 2021. As a result of the sale, we recorded a $6.6 million loss on sale at Corporate during the first quarter of fiscal 2022.
Operating income of $25.6 million in the first quarter of fiscal 2023 increased $16.9 million compared with the first quarter of fiscal 2022, primarily due to higher earnings in our Climate Solutions segment and the absence of the loss on the
sale of the Austrian air-cooled automotive business in the prior year. These drivers, which increased operating income, were partially offset by lower earnings in our Performance Technologies segment.
The provision for income taxes was $4.9 million and $1.9 million in the first quarter of fiscal 2023 and 2022, respectively. The $3.0 million increase was primarily due to the absence of a $4.8 million income tax benefit recorded in the prior
year resulting from the reversal of a tax valuation allowance in a foreign jurisdiction, partially offset by changes in the mix and amount of foreign and U.S. earnings.
SEGMENT RESULTS OF OPERATIONS
Effective April 1, 2022, we began managing our company under two operating segments, Climate Solutions and Performance Technologies. Our new segment structure aligns businesses serving similar or complimentary end markets, products and
technologies under common segment management. We expect this simplified segment structure will allow us to better focus resources on targeted growth opportunities and allow for a more efficient application of 80/20 principles across all product
lines to optimize profit margins and cash flow.
The Climate Solutions segment provides energy-efficient, climate-controlled solutions and components for a wide array of applications. The Climate Solutions segment sells heat transfer products, heating, ventilating, air conditioning and
refrigeration (“HVAC and refrigeration”) products, and data center cooling solutions. The Performance Technologies segment provides products and solutions that enhance the performance of customer applications and develops solutions that increase
fuel economy and lower emissions in light of increasingly stringent government regulations. The Performance Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial
applications. In addition, the Performance Technologies segment provides advanced thermal solutions to zero-emission and hybrid commercial vehicle and automotive customers and coating products and application services.
The Climate Solutions segment includes the previously-reported Building HVAC Systems and Commercial and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the
previously-reported Heavy Duty Equipment and Automotive segments and the CIS Coatings business. The segment realignment had no impact on our consolidated financial position, results of operations, and cash flows. Segment financial information for
fiscal 2022 has been recast to conform to the current presentation.
The following is a discussion of our segment results of operations for the three months ended June 30, 2022 and 2021:
|
Climate Solutions
|
||||||||||||||||
|
Three months ended June 30,
|
||||||||||||||||
|
2022
|
2021
|
|||||||||||||||
|
(in millions)
|
$’s
|
% of sales
|
$’s
|
% of sales
|
||||||||||||
|
Net sales
|
$
|
244.4
|
100.0
|
%
|
$
|
206.5
|
100.0
|
%
|
||||||||
|
Cost of sales
|
194.0
|
79.4
|
%
|
173.9
|
84.2
|
%
|
||||||||||
|
Gross profit
|
50.4
|
20.6
|
%
|
32.6
|
15.8
|
%
|
||||||||||
|
Selling, general and administrative expenses
|
23.4
|
9.6
|
%
|
21.6
|
10.5
|
%
|
||||||||||
|
Impairment charge
|
-
|
-
|
0.3
|
0.1
|
%
|
|||||||||||
|
Operating income
|
$
|
27.0
|
11.0
|
%
|
$
|
10.7
|
5.2
|
%
|
||||||||
Climate Solutions net sales increased $37.9 million, or 18 percent, from the first quarter of fiscal 2022 to the first quarter of fiscal 2023, primarily due to higher sales volume and favorable commercial pricing, including adjustments in
response to raw material price increases. These increases were partially offset by a $13.4 million unfavorable impact of foreign currency exchange rates. Compared with the first quarter of the prior year, sales of heat transfer, HVAC &
refrigeration, and data center cooling products increased $22.8 million, $7.6 million, and $7.3 million, respectively.
Climate Solutions cost of sales increased $20.1 million, or 12 percent, from the first quarter of fiscal 2022 to the first quarter of fiscal 2023, primarily due to higher sales volume and higher raw material prices, which increased by
approximately $15.0 million. These increases were partially offset by an $11.1 million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales decreased 480 basis points to 79.4 percent, primarily due to the
favorable impact of higher sales volume, favorable commercial pricing, and improved operating efficiencies, partially offset by higher labor and inflationary costs.
As a result of the higher sales and lower cost of sales as a percentage of sales, gross profit increased $17.8 million and gross margin improved 480 basis points to 20.6 percent.
SG&A expenses increased $1.8 million, yet decreased 90 basis points as a percentage of sales. The increase in SG&A expenses was primarily due to
higher compensation-related expenses, including higher commission expenses, and increases in other general and administrative expenses that have been impacted by inflationary market conditions. These increases were partially offset by a $1.1
million favorable impact of foreign currency exchange rate changes.
During the first quarter of fiscal 2022, we recorded an impairment charge of $0.3 million to write-down a previously-closed manufacturing facility in the U.S. to fair value less costs to sell. We sold the facility and received net cash proceeds
of $0.7 million during July 2021.
Operating income of $27.0 million increased $16.3 million from the first quarter of fiscal 2022 to the first quarter of fiscal 2023, primarily due to higher gross profit.
Performance Technologies
|
Three months ended June 30,
|
||||||||||||||||
|
2022
|
2021
|
|||||||||||||||
|
(in millions)
|
$’s
|
% of sales
|
$’s
|
% of sales
|
||||||||||||
|
Net sales
|
$
|
304.3
|
100.0
|
%
|
$
|
297.1
|
100.0
|
%
|
||||||||
|
Cost of sales
|
271.3
|
89.2
|
%
|
256.9
|
86.5
|
%
|
||||||||||
|
Gross profit
|
33.0
|
10.8
|
%
|
40.2
|
13.5
|
%
|
||||||||||
|
Selling, general and administrative expenses
|
24.1
|
7.9
|
%
|
26.3
|
8.8
|
%
|
||||||||||
|
Restructuring expenses
|
1.5
|
0.5
|
%
|
0.3
|
0.1
|
%
|
||||||||||
|
Impairment charges (reversals) - net
|
-
|
-
|
(2.1
|
)
|
-0.7
|
%
|
||||||||||
|
Operating income
|
$
|
7.4
|
2.4
|
%
|
$
|
15.7
|
5.3
|
%
|
||||||||
Performance Technologies net sales increased $7.2 million, or 2 percent, from the first quarter of fiscal 2022 to the first quarter of fiscal 2023, primarily due to favorable commercial pricing, including adjustments in response to raw material
price increases, and higher sales volume. These increases were partially offset by a $13.2 million unfavorable impact of foreign currency exchange rates and, to a lesser extent, the absence of sales from the Austrian air-cooled automotive
business, which we sold on April 30, 2021. Compared with the first quarter of the prior year, sales of air-cooled and advanced solutions products increased $11.5 million and $5.0 million respectively. Sales of liquid-cooled products decreased
$7.8 million, primarily due to the negative impacts associated with the government-required lock-downs in China related to COVID-19, including lower customer demand and supply chain challenges.
Performance Technologies cost of sales increased $14.4 million, or 6 percent, from the first quarter of fiscal 2022 to the first quarter of fiscal 2023, primarily due to higher raw material prices, which increased by approximately $20.0 million,
and higher sales volume. In addition, to a lesser extent, higher labor costs and higher depreciation expenses negatively impacted cost of sales. During the first quarter of fiscal 2022, we did not depreciate the held for sale property, plant and
equipment assets within the liquid-cooled automotive business. We resumed depreciating these assets when they reverted back to held and used classification during the third quarter of fiscal 2022. These increases were partially offset by a $12.0
million favorable impact of foreign currency exchange rates. As a percentage of sales, cost of sales increased 270 basis points to 89.2 percent, primarily due to the higher material costs.
As a result of the higher sales and higher cost of sales as a percentage of sales, gross profit decreased $7.2 million and gross margin declined 270 basis points to 10.8 percent.
SG&A expenses decreased $2.2 million compared with the first quarter of the prior year. As a percentage of sales, SG&A expenses decreased by 90 basis points. The decrease in SG&A expenses was primarily due to a $1.1 million
favorable impact of foreign currency exchange rate changes and, to a lesser extent, lower compensation-related expenses.
Restructuring expenses increased $1.2 million compared with the first quarter of fiscal 2022, primarily due to higher severance expenses. The severance expenses in the first quarter of fiscal 2023 primarily related to targeted headcount
reductions in Europe.
The net impairment reversal of $2.1 million in the first quarter of fiscal 2022 primarily related to assets in our liquid-cooled automotive business. As a result of modifying the sale perimeter with the prospective buyer to remove certain
manufacturing operations, we reevaluated the long-lived assets within the businesses that no longer met the requirements to be classified as held for sale. We reversed $7.4 million of previously-recorded impairment charges during the first quarter
of fiscal 2022 to adjust these assets to their estimated fair value. This impairment reversal was partially offset by $5.3 million of impairment charges related to other assets held for sale.
Operating income of $7.4 million decreased $8.3 million from the first quarter of fiscal 2022 to the first quarter of fiscal 2023, primarily due to lower gross profit.
Liquidity and Capital Resources
Our primary sources of liquidity are cash flow from operating activities, our cash and cash equivalents as of June 30, 2022 of $58.7 million, and an available borrowing capacity of $158.9 million under our revolving credit facility. Given our
extensive international operations, approximately $56.0 million of our cash and cash equivalents is held by our non-U.S. subsidiaries. Amounts held by non-U.S. subsidiaries are available for general corporate use; however, these funds may be
subject to foreign withholding taxes if repatriated. We believe our sources of liquidity will provide sufficient cash flow to adequately cover our funding needs on both a short-term and long-term basis.
Net Cash Provided by Operating Activities
Net cash provided by operating activities for the three months ended June 30, 2022 was $14.5 million, which represents a $24.6 million increase compared with net cash used for operating activities in the same period in the prior year. This
increase in operating cash flow was primarily due to the favorable impact of higher earnings and favorable net changes in working capital, including lower payments for incentive compensation and pension plan contributions as compared with the same
period in the prior year, partially offset by higher inventory levels. Inventories increased $29.6 million from March 31, 2022 to June 30, 2022. The Company has increased its inventory levels, particularly in the Climate Solutions segment, to
meet planned production increases. In addition, increased raw material prices and impacts from the global supply constraints and challenges have contributed to the higher inventory levels.
Capital Expenditures
Capital expenditures of $10.4 million during the first three months of fiscal 2023 decreased $1.0 million compared with the same period in the prior year.
Debt
Our credit agreements require us to maintain compliance with various covenants, including a leverage ratio covenant and an interest expense coverage ratio covenant discussed further below. Also, as specified in the credit agreement, the term
loans may require prepayments in the event of certain asset sales. In addition, at the time of each incremental borrowing under the revolving credit facility, we must represent to the lenders that there has been no material adverse effect, as
defined in the credit agreement, on our business, property, or results of operations.
The leverage ratio covenant within our primary credit agreements requires us to limit our consolidated indebtedness, less a portion of our cash balance, both as defined by the credit agreements, to no more than three and one-quarter times
consolidated net earnings before interest, taxes, depreciation, amortization, and certain other adjustments (“Adjusted EBITDA”). We are also subject to an interest expense coverage ratio covenant, which requires us to maintain Adjusted EBITDA of
at least three times consolidated interest expense. As of June 30, 2022, our leverage ratio and interest coverage ratio were 2.1 and 12.0, respectively. We expect to remain in compliance with our debt covenants during the remainder of fiscal 2023
and beyond.
Share Repurchase Program
During fiscal 2021, our Board of Directors approved a $50.0 million share repurchase program, which expires in November 2022. During the first quarter of fiscal 2023, we repurchased $1.1 million of common stock under this program and as of
June 30, 2022, we had $48.9 million of the repurchase authorization remaining. Our decision whether and to what extent to repurchase additional shares under this program will depend on a number of factors, including business conditions, other
cash priorities, and stock price.
Forward-Looking Statements
This report, including, but not limited to, the discussion under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements, including information about future financial performance,
accompanied by phrases such as “believes,” “estimates,” “expects,” “plans,” “anticipates,” “intends,” and other similar “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Modine’s actual results,
performance or achievements may differ materially from those expressed or implied in these statements, because of certain risks and uncertainties, including, but not limited to, those described under “Risk Factors” in Item 1A. in Part I. of the
Company’s Annual Report on Form 10-K for the year ended March 31, 2022. Other risks and uncertainties include, but are not limited to, the following:
Market Risks:
| • |
The impact of potential adverse developments or disruptions in the global economy and financial markets, including impacts related to tariffs, sanctions and other trade issues or cross-border trade restrictions (and any potential
resulting trade war), inflation and supply chain challenges, and including impacts associated with the military conflict between Russia and Ukraine;
|
| • |
The impact of the COVID-19 pandemic on the national and global economy, our business, suppliers (and the supply chain), customers, and employees;
|
| • |
The impact of other economic, social and political conditions, changes, challenges and unrest, particularly in the geographic, product and financial markets where we and our customers operate and compete, including foreign currency
exchange rate fluctuations; changes in interest rates; recession and recovery therefrom; and the general uncertainties about the impact of regulatory and/or policy changes, including those related to tax and trade that have been or may be
implemented in the U.S. or abroad;
|
| • |
The impact of potential price increases associated with raw materials, including aluminum, copper, steel and stainless steel (nickel), and other purchased component inventory including, but not limited to, increases in the underlying
material cost based upon the London Metal Exchange and related premiums or fabrication costs. These prices may be impacted by a variety of factors, including changes in trade laws and tariffs, the behavior of our suppliers and significant
fluctuations in demand. This risk includes our ability to successfully manage our exposure and our ability to adjust product pricing in response to price increases, including through our quotation process or through contract provisions for
prospective price adjustments, as well as the inherent lag in timing of such contract provisions;
|
| • |
Our ability to mitigate increased labor costs and labor shortages; and
|
| • |
The impact of current and future environmental laws and regulations on our business and the businesses of our customers, including our ability to take advantage of opportunities to supply alternative new technologies to meet
environmental and/or energy standards and objectives.
|
Operational Risks:
| • |
The impact of problems, including logistic and transportation challenges, associated with suppliers meeting our quantity, quality, price and timing demands, and the overall health of our suppliers, including their ability and willingness
to supply our volume demands if their production capacity becomes constrained;
|
| • |
The overall health of and price-reduction pressure from our vehicular customers in light of economic and market-specific factors, and the potential impact on us from any deterioration in the stability or performance of any of our major
customers;
|
| • |
Our ability to maintain current customer relationships and compete effectively for new business, including our ability to achieve profit margins acceptable to us by offsetting or otherwise addressing any cost increases associated with
supply chain challenges and inflationary market conditions;
|
| • |
The impact of product or manufacturing difficulties or operating inefficiencies, including any program launch and product transfer challenges and warranty claims;
|
| • |
The impact of delays or modifications initiated by major customers with respect to program launches, product applications or requirements;
|
| • |
Our ability to consistently structure our operations in order to develop and maintain a competitive cost base with appropriately skilled and stable labor, while also positioning ourselves geographically, so that we can continue to
support our customers with the technical expertise and market-leading products they demand and expect from Modine;
|
| • |
Our ability to effectively and efficiently manage our cost structure in response to sales volume increases or decreases and to complete restructuring activities and realize the anticipated benefits of those activities;
|
| • |
Costs and other effects of the investigation and remediation of environmental contamination; including when related to the actions or inactions of others and/or facilities over which we have no control;
|
| • |
Our ability to recruit and maintain talent, including personnel in managerial, leadership, operational and administrative functions, in light of tight global labor markets;
|
| • |
Our ability to protect our proprietary information and intellectual property from theft or attack by internal or external sources;
|
| • |
The impact of a substantial disruption or material breach of our information technology systems, and any related delays, problems or costs;
|
| • |
Increasingly complex and restrictive laws and regulations, including those associated with being a U.S. public company and others present in various jurisdictions in which we operate, and the costs associated with compliance therewith;
|
| • |
Work stoppages or interference at our facilities or those of our major customers and/or suppliers;
|
| • |
The constant and increasing pressures associated with healthcare and associated insurance costs; and
|
| • |
Costs and other effects of litigation, claims, or other obligations.
|
Strategic Risks:
| • |
Our ability to successfully realize anticipated benefits from strategic initiatives and our application of 80/20 principles to our business, through which we are focused on reducing complexity and growing businesses with strong market
drivers;
|
| • |
Our ability to successfully execute strategies to reduce costs and improve operating margins; and
|
| • |
The potential impacts from actions by activist shareholders, including disruption of our business and related costs.
|
Financial Risks:
| • |
Our ability to fund our global liquidity requirements efficiently for our current operations and meet our long-term commitments in the event of disruption in or tightening of the credit markets or extended recessionary conditions in the
global economy;
|
| • |
The impact of increases in interest rates in relation to our variable-rate debt obligations;
|
| • |
The impact of changes in federal, state or local taxes that could have the effect of increasing our income tax expense;
|
| • |
Our ability to comply with the financial covenants in our credit agreements, including our leverage ratio (net debt divided by Adjusted EBITDA, as defined in our credit agreements) and our interest coverage ratio (Adjusted EBITDA divided
by interest expense, as defined in our credit agreements);
|
| • |
The potential unfavorable impact of foreign currency exchange rate fluctuations on our financial results; and
|
| • |
Our ability to effectively realize the benefits of deferred tax assets in various jurisdictions in which we operate.
|
Forward-looking statements are as of the date of this report; we do not assume any obligation to update any forward-looking statements.
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
|
The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Part II, Item 7A. of the Company’s Annual Report on Form 10-K for the year ended March 31, 2022. The Company’s market risks have not
materially changed since the fiscal 2022 Form 10-K was filed.
| Item 4. |
Controls and Procedures.
|
Evaluation Regarding Disclosure Controls and Procedures
As of the end of the period covered by this quarterly report on Form 10-Q, management of the Company, under the supervision, and with the participation, of the Company’s President and Chief Executive Officer and
Executive Vice President, Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures, at a reasonable assurance level, as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon
that evaluation, the President and Chief Executive Officer and Executive Vice President, Chief Financial Officer have concluded that the design and operation of the Company’s disclosure controls and procedures were effective, at a
reasonable assurance level, as of June 30, 2022.
Changes in Internal Control Over Financial Reporting
There have been no changes in internal control over financial reporting during the first quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
PART II. OTHER INFORMATION
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
ISSUER PURCHASES OF EQUITY SECURITIES
The following describes the Company’s purchases of common stock during the first quarter of fiscal 2023:
|
Period
|
Total Number of Shares Purchased
|
Average
Price Paid
Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs |
Maximum Number (or
Approximate Dollar
Value) of Shares
that May Yet Be Purchased
Under the Plans or Programs (a)
|
||||||||
|
April 1 – April 30, 2022
|
_______
|
_______
|
_______
|
$50,000,000
|
||||||||
|
May 1 – May 31, 2022
|
30,849 (b)
|
$10.54
|
_______
|
$50,000,000
|
||||||||
|
June 1 – June 30, 2022
|
126,968 (b) (c)
|
|
$11.22
|
100,000
|
|
$48,894,053
|
||||||
|
Total
|
157,817 (b) (c)
|
|
$11.08
|
100,000
|
|
| (a) |
Effective November 5, 2020, the Board of Directors approved a two-year, $50.0 million share repurchase program. This program allows the Company to repurchase Modine common stock at such times and prices deemed appropriate by the
authorized officers of the Company.
|
| (b) |
Includes shares delivered back to the Company by employees and/or directors to satisfy tax withholding obligations that arise upon the vesting of stock awards. The Company, pursuant to its equity compensation plans, gives participants
the opportunity to turn back to the Company the number of shares from the award sufficient to satisfy tax withholding obligations that arise upon the termination of restrictions. These shares are held as treasury shares.
|
| (c) |
Includes shares acquired pursuant to the repurchase program described in (a) above.
|
| Item 6. |
Exhibits.
|
|
(a)
|
Exhibits:
|
|
Exhibit No.
|
Description
|
Incorporated Herein By
Reference To
|
Filed
Herewith
|
|
|
Form of Fiscal 2023 Modine Performance Cash Award Agreement.
|
X
|
|||
|
Form of Fiscal 2023 Modine Incentive Stock Option Award Agreement.
|
X
|
|||
|
Form of Fiscal 2023 Modine Non-Qualified Stock Option Award Agreement.
|
X
|
|||
|
Form of Fiscal 2023 Modine Restricted Stock Unit Award Agreement.
|
X
|
|||
|
Amended and Restated 2020 Incentive Compensation Plan.
|
Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated July 21, 2022
|
|||
|
Form of Fiscal 2023 Modine Non-Employee Director Deferred Restricted Stock Unit Award Agreement.
|
X
|
|||
|
Form of Fiscal 2023 Modine Non-Employee Director Restricted Stock Unit Award Agreement.
|
X
|
|||
|
Rule 13a-14(a)/15d-14(a) Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
|||
|
Rule 13a-14(a)/15d-14(a) Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
|||
|
Section 1350 Certification of Neil D. Brinker, President and Chief Executive Officer.
|
X
|
|||
|
Section 1350 Certification of Michael B. Lucareli, Executive Vice President, Chief Financial Officer.
|
X
|
|||
|
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
X
|
||
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema.
|
X
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
X
|
||
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
X
|
||
|
10.1.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
X
|
||
|
10.1.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
X
|
||
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
|
X
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
MODINE MANUFACTURING COMPANY
|
|
|
(Registrant)
|
|
|
By: /s/ Michael B. Lucareli
|
|
|
Michael B. Lucareli, Executive Vice President, Chief Financial Officer*
|
|
|
Date: August 4, 2022
|
|
*
|
Executing as both the principal financial officer and a duly authorized officer of the Company
|
32
Exhibit 10.1
MODINE MANUFACTURING COMPANY
PERFORMANCE CASH AWARD
AWARD AGREEMENT
We are pleased to inform you that you have been granted an opportunity to earn a Performance Cash Award of Modine Manufacturing Company (the “Company”), subject to the terms and conditions of this Award Agreement.
This Award Agreement is not subject to the Modine Manufacturing Company 2020 Incentive Compensation Plan (the “Plan”), but all terms used in this Award Agreement and not otherwise defined herein shall have the same meanings as set forth in the
Plan.
|
Full name of Grantee:
|
|
|
Date of Award:
|
|
|
Target amount of Performance Cash:
|
|
|
Performance Period:
|
April 1, 2022 to March 31, 2025
|
1. Performance Cash Award. You are hereby granted a Performance Cash Award, subject to the terms and conditions of this Award Agreement. “Performance Cash” means a cash award that is conditioned upon the
satisfaction of one or more pre-established Performance Goals. The amount of Performance Cash that will be earned hereunder if the Target Performance Goals are achieved is set forth above.
2. Terms of Performance Cash Award and Performance Goals. You have been granted an opportunity to earn a cash payment under this Performance Cash Award. The actual amount of Performance Cash that would be
earned by you will be determined as described below, based upon the actual results for the Performance Period set forth above compared to the Performance Goals set forth below, provided that you remain an employee of the Company or a Subsidiary for
the entire Performance Period (subject to the provisions below regarding death, Disability or retirement) and the achievement of the Performance Goals is greater than the Threshold amount specified below (the “Conditions”). If either of these
Conditions is not satisfied, then except as otherwise provided in this Award Agreement, no Performance Cash shall be earned. The Performance Goals for this Performance Cash Award are: Cash Flow Return on Invested Capital (“Cash Flow ROI”) and
Average Annual Adjusted EBITDA Growth (“EBITDA Growth”), with each having a 50% weight. The Threshold Performance Goals are the minimum Performance Goals necessary for the Performance Period that must be achieved by the Company in order for you to
qualify for any Performance Cash and the Maximum Performance Goals are the minimum Performance Goals for the Performance Period in order for you to qualify for the maximum amount of Performance Cash earned under this Performance Cash Award.
|
Performance Goal: Cash Flow ROI
|
Performance Cash Award Earned Based on Achievement of Performance Goal
|
|
Threshold: 7.0%
|
5% of Target amount of Performance Cash
|
|
Target: 10.5%
|
50% of Target amount of Performance Cash
|
|
Maximum: ≥14.0%
|
100% of Target amount of Performance Cash
|
|
Performance Goal: Average Annual
Adjusted EBITDA Growth
|
Performance Cash Award Earned Based on
Achievement of Performance Goal
|
|
Threshold: 2.0%
|
5% of Target amount of Performance Cash
|
|
Target: 7.0%
|
50% of Target amount of Performance Cash
|
|
Maximum: ≥12.0%
|
100% of Target amount of Performance Cash
|
“Cash Flow ROI” or “Cash Flow Return on Invested Capital” means the sum of Adjusted Free Cash Flow plus Cash Interest, all divided by Average Capital Employed. Adjusted Free Cash Flow equals “Net cash
provided by operating activities”, less “Expenditures for property, plant and equipment” (both as reported externally for the Company’s audited financial statements), plus or minus Permitted Adjustments (defined below) and Cash Interest equals cash
paid for interest expense related to outstanding debt. Average Capital Employed for each fiscal year equals total debt plus shareholders’ equity averaged over five points (i.e., the last day of each fiscal quarter and prior fiscal year-end); and
where shareholder’s equity excludes shareholder equity attributable to noncontrolling interests. Permitted Adjustments include:
Restructuring Charges
| • |
Fees and expenses for restructuring consultants or financial advisors
|
| • |
Employee severance, outplacement and related benefits
|
| • |
Employee insurance and benefits continuation
|
| • |
Contractual salary continuation for terminated employees
|
| • |
Equipment transfers and facility preparation
|
| • |
Environmental services (e.g., plant clean-up prior to sale)
|
Acquisition and Divestiture Charges
| • |
Fees and expenses for transaction advisors (i.e., financial advisors, consultants, lawyers and accountants)
|
| • |
Integration expenses
|
| • |
Other incremental costs and charges that are non-recurring and directly related to the transaction
|
Other
| • |
Fees and expenses for strategy advisory services associated with a specific transaction or unique project
|
2
| • |
Unusual, non-recurring or extraordinary cash and non-cash charges or income
|
Adoption of New Accounting Standards
| • |
The impact of the adoption of new U.S. GAAP accounting standards and significant changes in the Company’s accounting methods.
|
Divestitures
| ● |
The impact of significant divestitures, such that annual metrics will be calculated on a “continuing operations” basis for the periods following divestiture.
|
Notwithstanding the foregoing, the Committee may disregard all or part of any Permitted Adjustment as separately applicable to each performance metric if doing so would decrease the amount payable under this
Performance Cash Award.
“Average Annual Adjusted EBITDA Growth” means the simple three-year arithmetic average of the Company’s Adjusted EBITDA Growth during the Performance Period, as reported externally for the Company’s audited financial
statements. Adjusted EBITDA Growth equals current-year Adjusted EBITDA minus prior-year Adjusted EBITDA, with that total divided by prior-year Adjusted EBITDA. Adjusted EBITDA equals “Operating Income” plus “Depreciation and
Amortization Expenses”, both as reported externally for the Company’s audited financial statements, plus or minus Permitted Adjustments.
If actual Cash Flow ROI or EBITDA Growth for the Performance Period is between Threshold and Target and/or between Target and Maximum, the amount of Performance Cash earned shall be determined on a linear basis. In
the event that the Company’s actual Cash Flow ROI or EBITDA Growth does not meet the Threshold for the Performance Period, no Performance Cash shall be earned relative to such metric under this Performance Cash Award. In the event that the
Company’s actual Cash Flow ROI or EBITDA Growth exceeds the Maximum for the Performance Period, only the Maximum percentage of the Target amount of Performance Cash set forth above shall be earned relative to such metric.
3. Payment of Performance Cash. Performance Cash earned shall be paid after the end of the Performance Period as soon as administratively practicable after the Committee has approved and certified the
amount of Performance Cash that has been earned hereunder or, in the event of payment covered under Paragraph 4 below, within thirty (30) days of the date of your termination of employment.
4. Change in Control. Notwithstanding anything in this Agreement to the contrary, upon a Change in Control, all outstanding Performance Cash Awards shall be deemed to have satisfied the Target Performance
Goals and shall be paid pro-rata based upon the period worked during the Performance Period as of the date of an involuntary termination of your employment with the Company or a Subsidiary by the Company without Cause or by you for Good Reason
within one (1) year following a Change in Control. “Good Reason” means a material diminution in your base salary; material diminution in your annual target bonus opportunity; material diminution in your authority, duties or responsibilities;
material diminution in authority, duties or responsibilities of the supervisor to whom you report; material diminution in the budget over which you retain authority; or material change in the geographic location at which you must perform services.
3
5. Death or Disability. Notwithstanding anything in this Agreement to the contrary, upon your termination of employment due to death or Disability (as defined herein), a prorated portion (based on the period
working during the Performance Period) of the Performance Cash granted to you hereunder shall vest based on the Company’s actual achievement of the Performance Goals at the end of the Performance Period as certified by the Committee, and payment
will be made to you after the Committee has approved and certified the amount of Performance Cash that has been earned hereunder. For purposes of this Award Agreement, “Disability” shall mean “permanent and total disability” as defined in Section
22 (e)(3) of the Code.
6. Retirement. Notwithstanding anything in this Agreement to the contrary, upon your retirement (with Committee approval), the Committee may, in its sole discretion, vest some or all of the Performance Cash
granted to you hereunder and payment shall be made on such terms and conditions as the Committee may deem appropriate; provided, however, such payment shall be made in a manner that is exempt from or complies with Section 409A of the Code.
7. Forfeiture. Other than as described above in Paragraph 4 regarding a Change in Control or Paragraphs 5 or 6 regarding death, Disability or retirement, upon your termination of employment with the Company
or a Subsidiary for any reason during the Performance Period, you will forfeit all Performance Cash covered by this Agreement.
8. Transfer. This Performance Cash Award shall be nontransferable. Notwithstanding the foregoing, you shall have the right to transfer this Performance Cash Award upon your death, either by the terms of
your will or under the laws of descent and distribution.
9. No Obligation of Employment. This Performance Cash Award shall not impose any obligation on the Company to continue your employment with the Company or any Subsidiary.
10. Controlling Provisions. In the event of a conflict between the terms of this Award Agreement and any employment agreement or change in control agreement between you and the Company, this Award Agreement
shall control.
11. Forfeiture Under Recoupment Policy. The Company shall have the power and the right to require you to forfeit and return the Performance Cash paid hereunder consistent with any recoupment policy maintained
by the Company under applicable law, as such policy is amended from time to time.
12. Amendment. The Committee may from time to time amend, modify, suspend or terminate this Award Agreement; provided, however, that no such action shall adversely affect the Grantee without the Grantee’s
consent.
13. Use of Words. The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.
14. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.
15. Taxes. The Company may require payment of or withhold any tax which it believes is required as a result of this Performance Cash Award, and the Company may defer making payment with respect to Performance
Cash earned hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.
4
16. Committee Discretion. Notwithstanding anything in this Agreement, the Committee retains the discretion to make negative adjustments to the final determination of the achievement of any Performance Goals.
17. No Legal or Tax Advice. Notwithstanding anything stated in this Award Agreement, the Company is not providing any legal or tax advice related to this Performance Cash Award or any value received therefrom.
Nothing stated in this Award Agreement is intended to cover any legal or tax situation. You are encouraged to consult your own legal and/or tax advisors to address any questions or concerns you may have regarding this Award Agreement or any value
received therefrom.
18. Controlling Law. The law of the State of Wisconsin, except its law with respect to choice of law, shall be controlling in all matters relating to this Agreement.
By your electronic agreement and the signature of the Company’s representative below, you and the Company agree that this Performance Cash Award awarded to you under this Award Agreement is subject to the terms and
conditions hereof. You hereby agree to accept as binding any decision of the Committee with respect to the interpretation of this Award Agreement, or any other matters associated therewith.
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed as of _____________, 2022.
|
MODINE MANUFACTURING COMPANY
|
||
|
By:
|
/s/Neil D. Brinker
|
|
|
Neil D. Brinker
|
||
|
President and Chief Executive Officer
|
||
5
Exhibit 10.2
MODINE MANUFACTURING COMPANY
2020 INCENTIVE COMPENSATION PLAN
INCENTIVE STOCK OPTION
AWARD AGREEMENT
We are pleased to inform you that you have been granted an Option to purchase shares of Common Stock of Modine Manufacturing Company (the “Company”), subject to the terms and conditions of the Modine Manufacturing
Company 2020 Incentive Compensation Plan (the “Plan”) and of this Award Agreement. Unless otherwise defined herein, all terms used in this Award Agreement shall have the same meanings as set forth in the Plan.
|
Full name of Grantee:
|
|
Date of Award:
|
|
Exercise price per share:
|
|
Total number of shares:
|
|
Total exercise price:
|
1. Option. Pursuant to the Plan, you are hereby granted the option to purchase shares of Common Stock on the terms and conditions set forth in this Award Agreement. The Option is intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code to the extent it meets the requirements thereof, including the $100,000 per year limitation in Code Section 422(d). Any portion of the Option that does not qualify as an
Incentive Stock Option shall be a Nonqualified Stock Option. This Option is intended to qualify as an Incentive Stock Option so that you may obtain preferential tax treatment and, consequently, certain
limitations on disposition must be observed. In order to obtain preferential tax treatment, shares of Common Stock obtained upon exercise of the Option may not be disposed of within twenty-four (24) months after the Date of Award or within twelve
(12) months after exercise of the Option.
2. Vesting Schedule. The Option granted pursuant to this Award will vest according to the following schedule, provided, however, that, except as otherwise provided in Section 11.02 of the
Plan or in this Award Agreement, you must be employed by the Company or a Subsidiary on each vesting date for that portion of the Option to vest. If you separate from service due to Disability (as defined below), death, or your retirement (with
Committee approval) prior to any Vesting Date, any unvested portion of the Option shall become fully and immediately exercisable. For purposes of this Award Agreement, “Disability” shall mean “permanent and total disability” as defined in Section
22 (e)(3) of the Code.
|
Number of Shares of Common Stock
|
Vesting Date
|
|
33% of the total number of shares
|
|
|
33% of the total number of shares
|
|
|
34% of the total number of shares
|
|
3. Time of Exercise; Exercise Limitation. Vested Options may be exercised (in the manner provided in paragraph 4 hereof) in whole or in part, from time to time after the Vesting Date; provided, however,
that because you are an executive officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, the Option may not be exercised by you within six (6) months after the Grant Date.
4. Method of Exercising Option. Subject to the limitations stated elsewhere in this Award Agreement or in the Plan, this Option will be exercisable as to all or a portion of the Common Stock in accordance
with the vesting schedule above in Paragraph 2. In no event will the Option be exercisable if it would result in a violation of federal or state securities laws or would occur later than ten (10) years from the date of grant. The Option may be
exercised in whole or in part by delivery to the Company or its designee of (a) written notice identifying the Option and stating the number of shares with respect to which it is being exercised, and (b) payment in full of the exercise price of the
shares then being acquired; provided, however, that you may pay the exercise price either in cash, by transferring to the Company shares of stock of the Company at their Fair Market Value as of the date of exercise of the Option
("Delivered Stock"), a combination of cash and Delivered Stock, or such other forms or means that the Company determines are consistent with the Plan's purpose and applicable law. Notwithstanding the foregoing, the Company may arrange for or
cooperate in permitting broker-assisted cashless exercise procedures. No person shall acquire any rights or privileges of a shareholder of the Company with respect to any shares of Common Stock until such shares have been duly issued. The Company
shall have the right to delay the issue or delivery of any shares to be delivered hereunder until (a) the completion of such registration or qualification of such shares under federal, state or foreign law, ruling or regulation as the Company shall
deem to be necessary or advisable, and (b) receipt from you of such documents and information as the Company may deem necessary or appropriate in connection with such registration or qualification or the issuance of shares hereunder.
5. Expiration Date. Upon a termination of your employment for any reason (except termination of employment for Cause), this Option shall expire one (1) year from the date of termination of your employment.
Upon your termination of employment for Cause, this Option shall immediately expire. Notwithstanding anything herein contained to the contrary, this Option shall not be exercisable subsequent to ten (10) years after the date of grant. Your Option
will become nonqualified (i.e., lose preferential tax treatment) if it is not exercised within three (3) months after a termination of employment or within one (1) year after a termination of employment due to Disability.
6. Transfer of Option. The Option shall be nontransferable and shall, except in the case of death or Disability, be exercisable only by you during your lifetime. Notwithstanding the foregoing, you shall
have the right to transfer the Option upon your death, either by the terms of your will or under the laws of descent and distribution. In the case of your Disability, the Option shall be exercisable by your personal representative. Upon your
death, the Option shall be exercisable by your personal representative, administrator, or other representative of your estate, or the person or persons to whom this Option shall pass by will or under the laws of descent and distribution.
7. Transfer of Stock. If you dispose of any of the Common Stock acquired upon exercise of the Option within twenty-four (24) months after the date the Option was granted or within twelve (12) months after
exercise of the Option, then, you shall promptly notify the Company of the number of shares so disposed of, the dates of disposition, and the consideration, if any, received for such shares. In order to comply with federal income tax law, the
Company may take such action as it deems appropriate to ensure notice to the Company of any disposition of the Common Stock with the time periods described.
2
8. No Unlawful Issue of Shares. If, in the opinion of its counsel, the issue or sale of any shares of its stock hereunder pursuant to the Option shall not be lawful for any reason, including the inability
of the Company to obtain, from any regulatory body having jurisdiction, authority deemed by such counsel to be necessary to such issuance or sale, the Company shall not be obligated to issue or sell any such shares pursuant to the exercise of the
Option.
9. No Obligation of Employment. The Option shall not impose any obligation on the Company to continue your employment with the Company or a Subsidiary.
10. Controlling Provisions; Plan Controls. In the event of a conflict between the terms of this Award Agreement and any employment agreement or change in control
agreement between you and the Company, this Award Agreement shall control. This Option is qualified in its entirety by reference to the terms and conditions of the Plan under which it is granted, a copy of which you may request from the Company.
The Plan empowers the Committee to make interpretations, rules and regulations thereunder and, in general, provides that the determinations of such Committee with respect to the Plan shall be binding upon you. The Plan is hereby incorporated
herein by reference.
11. Change in Control. The vesting of the Option in the event of a Change in Control is governed by Section 11.02 of the Plan. Involuntary termination of your employment by the Company would be termination
of your employment by the Company without Cause and termination by you of your employment for Good Reason. “Good Reason” means a material diminution in your base salary; material diminution in your annual target bonus opportunity; material
diminution in your authority, duties or responsibilities; material diminution in authority, duties or responsibilities of the supervisor to whom you report; material diminution in the budget over which you retain authority; or material change in
the geographic location at which you must perform services.
12. Forfeiture Under Recoupment Policy. The Company shall have the power and the right to require you to forfeit this Option, return the shares of Common Stock issued pursuant to an exercise of this Option or
any proceeds therefrom consistent with any recoupment policy maintained by the Company under applicable law, as such policy is amended from time to time.
13. Use of Words. The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.
14. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.
15. Taxes. The Company may require payment of or withhold any tax that it believes is required as a result of the grant or exercise of the Option, and the Company may defer making delivery with respect to
shares issuable hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.
16. No Legal or Tax Advice. Notwithstanding anything stated in this Award Agreement, the Company is not providing any legal or tax advice related to this Option or any Common Stock that may be obtained upon
exercise of this Option. Nothing stated in this Option is intended to cover any legal or tax situation. You are encouraged to consult your own legal and/or tax advisors to address any questions or concerns you may have regarding this Option or any
Common Stock that may be obtained upon the exercise of this Option.
3
17. Personal Information. Solium Capital LLC and Equiniti Trust Company assist the Company in the operation of the Plan and the administration of the Option granted pursuant to this Award Agreement. If you
choose to participate in the Plan, you acknowledge and consent to the Company sharing your name, email, and information regarding the grant of the Option under this Award Agreement with both Solium Capital LLC and Equiniti Trust Company.
By your electronic agreement and the signature of the Company’s representative below, you and the Company agree that the Option which has been awarded to you under this Award Agreement is subject to the terms and
conditions of the Plan, a copy of which is available to you upon request. As provided in the Plan, you hereby agree to accept as binding any decision of the Committee with respect to the interpretation of the Plan and this Award Agreement, or any
other matters associated therewith.
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed as of ____________, 2022.
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MODINE MANUFACTURING COMPANY
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By:
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/s/Neil D. Brinker
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Neil D. Brinker
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President and Chief Executive Officer
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4
Exhibit 10.3
MODINE MANUFACTURING COMPANY
2020 INCENTIVE COMPENSATION PLAN
NON-QUALIFIED STOCK OPTION
AWARD AGREEMENT
We are pleased to inform you that you have been granted an Option to purchase shares of Common Stock of Modine Manufacturing Company (the “Company”), subject to the terms and conditions of the Modine Manufacturing
Company 2020 Incentive Compensation Plan (the “Plan”) and of this Award Agreement. Unless otherwise defined herein, all terms used in this Award Agreement shall have the same meanings as set forth in the Plan.
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Full name of Grantee:
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Date of Award:
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Exercise price per share:
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Total number of shares:
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Total exercise price:
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1. Option. Pursuant to the Plan, you are hereby granted the option to purchase shares of Common Stock on the terms and conditions set forth in this Award Agreement. The Option granted hereunder shall be a
Non-Qualified Stock Option.
2. Vesting Schedule. The Option granted pursuant to this Award will vest according to the following schedule, provided, however, that, except as otherwise provided in Section 11.02 of the
Plan or in this Award Agreement, you must be employed by the Company or a Subsidiary on each vesting date for that portion of the Option to vest. If you separate from service due to Disability (as defined below), death, or your retirement (with
Committee approval) prior to any Vesting Date, any unvested portion of the Option shall become fully and immediately exercisable. For purposes of this Award Agreement, “Disability” shall mean “permanent and total disability” as defined in Section
22 (e)(3) of the Code.
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Number of Shares of Common Stock
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Vesting Date
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33% of the total number of shares
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33% of the total number of shares
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34% of the total number of shares
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3. Time of Exercise; Exercise Limitation. Vested Options may be exercised (in the manner provided in paragraph 4 hereof) in whole or in part, from time to time after the Vesting Date; provided, however,
that because you are an executive officer of the Company subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, the Option may not be exercised by you within six (6) months after the Grant Date.
4. Method of Exercising Option. Subject to the limitations stated elsewhere in this Award Agreement or in the Plan, this Option will be exercisable as to all or a portion of the Common Stock in accordance
with the vesting schedule above in Paragraph 2. In no event will the Option be exercisable if it would result in a violation of federal or state securities laws or would occur later than ten (10) years from the date of grant. The Option may be
exercised in whole or in part by delivery to the Company or its designee of (a) written notice identifying the Option and stating the number of shares with respect to which it is being exercised, and (b) payment in full of the exercise price of the
shares then being acquired; provided, however, that you may pay the exercise price either in cash, by transferring to the Company shares of stock of the Company at their Fair Market Value as of the date of exercise of the Option
("Delivered Stock"), a combination of cash and Delivered Stock, or such other forms or means that the Company determines are consistent with the Plan's purpose and applicable law. Notwithstanding the foregoing, the Company may arrange for or
cooperate in permitting broker-assisted cashless exercise procedures. No person shall acquire any rights or privileges of a shareholder of the Company with respect to any shares of Common Stock until such shares have been duly issued. The Company
shall have the right to delay the issue or delivery of any shares to be delivered hereunder until (a) the completion of such registration or qualification of such shares under federal, state or foreign law, ruling or regulation as the Company shall
deem to be necessary or advisable, and (b) receipt from you of such documents and information as the Company may deem necessary or appropriate in connection with such registration or qualification or the issuance of shares hereunder.
5. Expiration Date. Upon a termination of your employment for any reason (except termination of employment for Cause), this Option shall expire one (1) year from the date of termination of your
employment. Upon your termination of employment for Cause, this Option shall immediately expire. Notwithstanding anything herein contained to the contrary, this Option shall not be exercisable subsequent to ten (10) years after the date of grant.
6. Transfer of Option. The Option shall be nontransferable and shall, except in the case of death or Disability, be exercisable only by you during your lifetime. Notwithstanding the foregoing, you shall
have the right to transfer the Option upon your death, either by the terms of your will or under the laws of descent and distribution. In the case of your Disability, the Option shall be exercisable by your personal representative. Upon your
death, the Option shall be exercisable by your personal representative, administrator, or other representative of your estate, or the person or persons to whom this Option shall pass by will or under the laws of descent and distribution.
7. No Unlawful Issue of Shares. If, in the opinion of its counsel, the issue or sale of any shares of its stock hereunder pursuant to the Option shall not be lawful for any reason, including the inability
of the Company to obtain, from any regulatory body having jurisdiction, authority deemed by such counsel to be necessary to such issuance or sale, the Company shall not be obligated to issue or sell any such shares pursuant to the exercise of the
Option.
8. No Obligation of Employment. The Option shall not impose any obligation on the Company to continue your employment with the Company or a Subsidiary.
9. Controlling Provisions; Plan Controls. In the event of a conflict between the terms of this Award Agreement and any employment agreement or change in control
agreement between you and the Company, this Award Agreement shall control. This Option is qualified in its entirety by reference to the terms and conditions of the Plan under which it is granted, a copy of which you may request from the Company.
The Plan empowers the Committee to make interpretations, rules and regulations thereunder and, in general, provides that the determinations of such Committee with respect to the Plan shall be binding upon you. The Plan is hereby incorporated
herein by reference.
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10. Change in Control. The vesting of the Option in the event of a Change in Control is governed by Section 11.02 of the Plan. Involuntary termination of your employment by the Company would be termination
of your employment by the Company without Cause and termination by you of your employment for Good Reason. “Good Reason” means a material diminution in your base salary; material diminution in your annual target bonus opportunity; material
diminution in your authority, duties or responsibilities; material diminution in authority, duties or responsibilities of the supervisor to whom you report; material diminution in the budget over which you retain authority; or material change in
the geographic location at which you must perform services.
11. Forfeiture Under Recoupment Policy. The Company shall have the power and the right to require you to forfeit this Option, return the shares of Common Stock issued pursuant to an exercise of this Option or
any proceeds therefrom consistent with any recoupment policy maintained by the Company under applicable law, as such policy is amended from time to time.
12. Use of Words. The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.
13. Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.
14. Taxes. The Company may require payment of or withhold any tax that it believes is required as a result of the grant or exercise of the Option, and the Company may defer making delivery with respect to
shares issuable hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.
15. No Legal or Tax Advice. Notwithstanding anything stated in this Award Agreement, the Company is not providing any legal or tax advice related to this Option or any Common Stock that may be obtained upon
exercise of this Option. Nothing stated in this Option is intended to cover any legal or tax situation. You are encouraged to consult your own legal and/or tax advisors to address any questions or concerns you may have regarding this Option or any
Common Stock that may be obtained upon the exercise of this Option.
16. Personal Information. Solium Capital LLC and Equiniti Trust Company assist the Company in the operation of the Plan and the administration of the Option granted pursuant to this Award Agreement. If you
choose to participate in the Plan, you acknowledge and consent to the Company sharing your name, email, and information regarding the grant of the Option under this Award Agreement with both Solium Capital LLC and Equiniti Trust Company.
By your electronic agreement and the signature of the Company’s representative below, you and the Company agree that the Option which has been awarded to you under this Award Agreement is subject to the terms and
conditions of the Plan, a copy of which is available to you upon request. As provided in the Plan, you hereby agree to accept as binding any decision of the Committee with respect to the interpretation of the Plan and this Award Agreement, or any
other matters associated therewith.
3
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed as of ____________, 2022.
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MODINE MANUFACTURING COMPANY
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By:
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/s/Neil D. Brinker
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Neil D. Brinker
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President and Chief Executive Officer
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4
Exhibit 10.4
MODINE MANUFACTURING COMPANY
2020 INCENTIVE COMPENSATION PLAN
RESTRICTED STOCK UNIT AWARD
AWARD AGREEMENT
We are pleased to inform you that you have been granted a Restricted Stock Unit Award subject to the terms and conditions of the Modine Manufacturing Company 2020 Incentive Compensation Plan (the “Plan”) and of this
Award Agreement. Unless otherwise defined herein, all terms used in this Award Agreement shall have the same meanings as set forth in the Plan.
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Full name of Grantee:
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Date of Award:
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Total number of Restricted Stock Units:
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1. Restricted Stock Unit Award. Pursuant to the Plan, you are hereby granted a Restricted Stock Unit Award (“Award”), subject to the terms and conditions of this Award Agreement and the Plan. Accordingly,
you are hereby granted the aggregate number of Restricted Stock Units (“RSUs”) set forth above, subject to the restrictions and conditions set forth in this Award Agreement.
2. Restricted Period. Upon the expiration of the Restricted Period (as described in the chart below) applicable to the number of RSUs specified in the chart below, you shall receive one share of Common Stock
for each RSU for which the Restricted Period has expired. For purposes of this Award Agreement, the Restricted Period shall mean the period beginning on the date of this Award set forth above and ending as set forth below:
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Number of RSUs that Vest
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Restricted Period Expiration
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33% of the total number of RSUs
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33% of the total number of RSUs
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34% of the total number of RSUs
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Except as otherwise provided in Section 8.02(f) or Section 11.02 of the Plan, in the event of your termination of employment with the Company or a Subsidiary for any reason (other than due to Disability (as defined below), death, or (with
Committee approval) your retirement) prior to the expiration of the Restricted Period for any RSUs, you shall forfeit to the Company all RSUs for which the Restricted Period has not expired and the right to receive any Common Stock with respect to
such RSUs. If you separate from service with the Company or a Subsidiary due to Disability, death, or (with Committee approval) your retirement prior to the end of the Restricted Period for any RSUs, your Restricted Stock Unit Award shall vest in
full. For purposes of this Award Agreement, “Disability” shall mean “permanent and total disability” as defined in Section 22 (e)(3) of the Code.
3. Shareholder Status. You shall not have any voting or other ownership rights in the Company arising from the grant of RSUs under this Agreement, unless and until such RSUs are settled pursuant to Section 4,
below. Further, you shall not be entitled to dividend equivalents during the period you hold RSUs.
4. Settlement and Delivery. As soon as administratively practicable after the expiration of the Restricted Period, the Company shall ascribe to you (or, in the event of your death, your beneficiary) a share
of Common Stock for each RSU that vests as a result of the expiration of the Restricted Period in a book entry on the records kept by the Company’s transfer agent or such other method of delivering shares of Common Stock subject to this Award, as
determined by the Committee.
5. Transfer. This Restricted Stock Unit Award shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you other than in the event of your death. Except for the
designation of your beneficiary in the event of your death, the purported assignment, alienation, pledge, attachment, transfer or encumbrance of the Award or this Award Agreement shall be void and unenforceable against the Company. This provision
shall not prevent you from transferring the shares of Common Stock issued hereunder after the expiration of the Restricted Period.
6. No Obligation of Employment. This Restricted Stock Unit Award shall not impose any obligation on the Company to continue your employment with the Company or any Subsidiary.
7. Controlling Provisions; Plan Controls. In the event of a conflict between the terms of this Award Agreement and any employment agreement or change in control agreement between you and the Company,
this Award Agreement shall control. This Award Agreement is qualified in its entirety by reference to the terms and conditions of the Plan under which it is granted, a copy of which you may request from the Company. The Plan empowers the
Committee to make interpretations, rules and regulations thereunder and, in general, provides that the determinations of such Committee with respect to the Plan shall be binding upon you. The Plan is incorporated herein by reference.
8. Change in Control. The vesting of the Award in the event of a Change in Control is governed by Section 11.02 of the Plan. Involuntary termination of your employment by the Company would be termination
of your employment by the Company without Cause or termination by you of your employment for Good Reason. “Good Reason” means a material diminution in your base salary; material diminution in your annual target bonus opportunity; material
diminution in your authority, duties or responsibilities; material diminution in authority, duties or responsibilities of the supervisor to whom you report; material diminution in the budget over which you retain authority; or material change in
the geographic location at which you must perform services.
9. Forfeiture Under Recoupment Policy. The Company shall have the power and the right to require you to forfeit and return the shares of Common Stock issued as a result of the vesting of any Award or any
proceeds therefrom consistent with any recoupment policy maintained by the Company under applicable law, as such policy is amended from time to time.
10. Use of Words. The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.
11. Successors. This Award Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.
12. Taxes. The Company may require payment of or withhold any tax which it believes is required as a result of the Award and/or the issuance of Common Stock resulting from the vesting of the RSUs that are the
subject of this Award, and the Company may defer making delivery with respect to shares issuable hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.
2
13. No Legal or Tax Advice. Notwithstanding anything stated in this Award Agreement, the Company is not providing any legal or tax advice related to this Award or any Common Stock that may be obtained upon
vesting of this Award. Nothing stated in this Award is intended to cover any legal or tax situation. You are encouraged to consult your own legal and/or tax advisors to address any questions or concerns you may have regarding this Award or any
Common Stock that may be obtained upon vesting of this Award.
14. Personal Information. Solium Capital LLC and Equiniti Trust Company assist the Company in the operation of the Plan and the administration of the Restricted Stock Unit Award granted pursuant to this Award
Agreement. If you choose to participate in the Plan, you acknowledge and consent to the Company sharing your name, email, and information regarding the grant of the Restricted Stock Unit Award under this Award Agreement with both Solium Capital
LLC and Equiniti Trust Company.
By your electronic agreement and the signature of the Company’s representative below, you and the Company agree that the Restricted Stock Unit Award awarded to you under this Award Agreement are subject to the terms
and conditions of the Plan, a copy of which is available to you upon request. As provided in the Plan, you hereby agree to accept as binding any decision of the Committee with respect to the interpretation of the Plan and this Award Agreement, or
any other matters associated therewith.
IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed as of ____________, 2022.
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MODINE MANUFACTURING COMPANY
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||
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By:
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/s/Neil D. Brinker
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Neil D. Brinker
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President and Chief Executive Officer
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3
Exhibit 10.6
MODINE MANUFACTURING COMPANY
2020 INCENTIVE COMPENSATION PLAN
NON-EMPLOYEE DIRECTOR
DEFERRED RESTRICTED STOCK UNIT AWARD
We are pleased to inform you that you have been granted a Restricted Stock Unit Award (the “Award”) subject to the terms and conditions of the Modine Manufacturing Company 2020 Incentive Compensation Plan (the “Plan”)
and of this Award Agreement. Unless otherwise defined herein, all terms used in this Award Agreement shall have the same meanings as set forth in the Plan.
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Full name of Grantee:
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Date of Award:
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Total number of
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Restricted Stock Units:
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1. Restricted Stock Unit Award. Pursuant to the Plan and your election pursuant to that certain Annual Stock Grant RSU Election Form (the “Election Form”) that you delivered to the Company during the
calendar year prior to the date of this Award, you are hereby granted an Award, subject to the terms and conditions of this Award Agreement and the Plan. Accordingly, you are hereby granted the number of restricted stock units set forth above (the
“RSUs”), effective as of the date of Award set forth above (the “Grant Date”). All RSUs granted hereunder shall vest as of the one-year anniversary of the Grant Date regardless of whether you have a separation from service with the Company for any
reason prior to such anniversary date.
2. Settlement and Delivery. The above RSUs shall be settled as of the date you elected in the Election Form (such date that you elected, the “Settlement Date”), provided
you may delay the date the RSUs are settled if you submit a new Settlement Date to Modine Manufacturing Company (the “Company”) in accordance with the procedures set forth in the Annual Stock Grant RSU Election Form.
As of the Settlement Date, each RSU awarded to you under this Award Agreement shall be settled by ascribing to you (or in the event of your death, your beneficiary) a share of Common Stock in book entry on the records kept by the Company’s
transfer agent or such other method of delivering shares of Common Stock subject to this Award Agreement, as determined by the Committee. You shall not have any voting or other ownership rights in the Company arising from the grant of RSUs under
this Award Agreement, unless and until such RSUs are settled pursuant to the terms hereof. For the avoidance of doubt, to the extent the Settlement Date occurs prior to the vesting of the Award as a result of a “Termination of Service” (as defined
in the Election Form), such shares will be delivered to you within thirty (30) days of such Termination of Service.
3. Dividend Equivalents. If any dividends are paid by the Company on the Company’s Common Stock between the Grant Date and the Settlement Date, then on the date of such a dividend payment, you shall be
granted an additional number of RSUs equal to the amount of dividends you would have received if your RSUs had been outstanding shares of Common Stock on the date of the dividend payment to the Company’s shareholders, divided by the average closing
price of a share of Common Stock for the one-month period prior to the dividend payment date. Such dividend RSUs shall be settled at the same time as all other RSUs are settled under this Award Agreement.
4. Transfer. The Award shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you other than in the event of your death. Except for the designation of your
beneficiary in the event of your death, the purported assignment, alienation, pledge, attachment, transfer or encumbrance of the Award or this Award Agreement shall be void and unenforceable against the Company. This provision shall not prevent
you from transferring any shares of Common Stock issued hereunder following the issuance of such shares in settlement of this Award.
5. No Obligation of Service. The Award shall not impose any obligation on the Company to continue your service with the Company.
6. Provisions of the Plan Control. The Award is qualified in its entirety by reference to the terms and conditions of the Plan under which it is granted, a copy of
which you may request from the Company. The Plan empowers the Committee to make interpretations, rules and regulations thereunder and, in general, provides that the determinations of such Committee with respect to the Plan shall be binding upon
you. The Plan is incorporated herein by reference.
7. Forfeiture Under Recoupment Policy. The Company shall have the power and the right to require you to forfeit and return any shares of Common Stock issued pursuant to this Award or any proceeds therefrom
consistent with any recoupment policy maintained by the Company under applicable law, as such policy is amended from time to time.
8. Use of Words. The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.
9. Successors. This Award Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.
10. Taxes. The Company may require payment of or withhold any minimum tax which it believes it is required to withhold, if any, as a result of the Award, and the Company may defer making delivery with respect
to shares issuable hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.
11. No Legal or Tax Advice. Notwithstanding anything stated in this Award Agreement, the Company is not providing any legal or tax advice related to the Award or any Common Stock that may be obtained upon
settlement of the Award. Nothing stated in this Award Agreement is intended to cover any legal or tax situation. You are encouraged to consult your own legal and/or tax advisors to address any questions or concerns you may have regarding the Award
or any Common Stock that may be obtained upon settlement of the Award.
12. Personal Information. Solium Capital LLC and Equiniti Trust Company assist the Company in the operation of the Plan and the administration of the Award granted pursuant to this Award Agreement. If you
choose to participate in the Plan, you acknowledge and consent to the Company sharing your name, email, and information regarding the grant of the Award under this Award Agreement with both Solium Capital LLC and Equiniti Trust Company.
SIGNATURES ON THE FOLLOWING PAGE
2
By your signature and the signature of the Company’s representative below, you and the Company agree that the RSUs awarded to you under this Award Agreement are subject to the terms and conditions of the Plan, a copy
of which is available to you upon request. As provided in the Plan, you hereby agree to accept as binding any decision of the Committee with respect to the interpretation of the Plan and this Award Agreement, or any other matters associated
therewith.
IN WITNESS WHEREOF, the Company has caused these presents to be executed as of __________, 2022.
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MODINE MANUFACTURING COMPANY
|
||
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By:
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/s/Neil D. Brinker
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Neil D. Brinker
|
||
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President and Chief Executive Officer
|
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The undersigned hereby accepts the foregoing Restricted Stock Unit Award and agrees to the terms and conditions of this Award Agreement and of the Plan.
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3
Exhibit 10.7
MODINE MANUFACTURING COMPANY
2020 INCENTIVE COMPENSATION PLAN
NON-EMPLOYEE DIRECTOR
RESTRICTED STOCK UNIT AWARD
We are pleased to inform you that you have been granted a Restricted Stock Unit Award (the “Award”) subject to the terms and conditions of the Modine Manufacturing Company 2020 Incentive Compensation Plan (the “Plan”)
and of this Award Agreement. Unless otherwise defined herein, all terms used in this Award Agreement shall have the same meanings as set forth in the Plan.
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Full name of Grantee:
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Date of Award:
|
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Total number of
|
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Restricted Stock Units:
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1. Restricted Stock Unit Award. Pursuant to the Plan, you are hereby granted an Award, subject to the terms and conditions of this Award Agreement and the Plan. Accordingly, you are hereby granted the
number of restricted stock units set forth above (the “RSUs”), effective as of the date of Award set forth above (the “Grant Date”). All RSUs granted hereunder shall vest as of the one-year anniversary of the Grant Date (the “Vesting Date”)
regardless of whether you have a separation from service with the Company for any reason prior to the Vesting Date.
2. Settlement and Delivery. As of the Vesting Date, each RSU awarded to you under this Award Agreement shall be settled by ascribing to you (or in the event of your
death, your beneficiary) a share of Common Stock in book entry on the records kept by the Company’s transfer agent or such other method of delivering shares of Common Stock subject to this Award Agreement, as determined by the Committee. You shall
not have any voting or other ownership rights in the Company arising from the grant of RSUs under this Award Agreement, unless and until such RSUs are settled pursuant to the terms hereof.
3. Dividend Equivalents. If any dividends are paid by the Company on the Company’s Common Stock between the Grant Date and the Vesting Date, then on the date of such a dividend payment, you shall be granted
an additional number of RSUs equal to the amount of dividends you would have received if your RSUs had been outstanding shares of Common Stock on the date of the dividend payment to the Company’s shareholders, divided by the average closing price
of a share of Common Stock for the one-month period prior to the dividend payment date. Such dividend RSUs shall be settled at the same time as all other RSUs are settled under this Award Agreement (i.e.,
as of the Vesting Date).
4. Transfer. The Award shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by you other than in the event of your death. Except for the designation of your
beneficiary in the event of your death, the purported assignment, alienation, pledge, attachment, transfer or encumbrance of the Award or this Award Agreement shall be void and unenforceable against the Company. This provision shall not prevent
you from transferring any shares of Common Stock issued hereunder following the issuance of such shares in settlement of this Award.
5. No Obligation of Service. The Award shall not impose any obligation on the Company to continue your service with the Company.
6. Provisions of the Plan Control. The Award is qualified in its entirety by reference to the terms and conditions of the Plan under which it is granted, a copy of which you may request from the Company.
The Plan empowers the Committee to make interpretations, rules and regulations thereunder and, in general, provides that the determinations of such Committee with respect to the Plan shall be binding upon you. The Plan is incorporated herein by
reference.
7. Forfeiture Under Recoupment Policy. The Company shall have the power and the right to require you to forfeit and return any shares of Common Stock issued pursuant to this Award or any proceeds therefrom
consistent with any recoupment policy maintained by the Company under applicable law, as such policy is amended from time to time.
8. Use of Words. The use of words of the masculine gender in this Award Agreement is intended to include, wherever appropriate, the feminine or neuter gender and vice versa.
9. Successors. This Award Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.
10. Taxes. The Company may require payment of or withhold any minimum tax which it believes it is required to withhold, if any, as a result of the Award and the Company may defer making delivery with respect
to shares issuable hereunder until arrangements satisfactory to the Company have been made with respect to such tax withholding obligations.
11. No Legal or Tax Advice. Notwithstanding anything stated in this Award Agreement, the Company is not providing any legal or tax advice related to the Award or any Common Stock that may be obtained upon
settlement of the Award. Nothing stated in this Award Agreement is intended to cover any legal or tax situation. You are encouraged to consult your own legal and/or tax advisors to address any questions or concerns you may have regarding the Award
or any Common Stock that may be obtained upon settlement of the Award.
12. Personal Information. Solium Capital LLC and Equiniti Trust Company assist the Company in the operation of the Plan and the administration of the Award granted pursuant to this Award Agreement. If you
choose to participate in the Plan, you acknowledge and consent to the Company sharing your name, email, and information regarding the grant of the Award under this Award Agreement with both Solium Capital LLC and Equiniti Trust Company.
SIGNATURES ON THE FOLLOWING PAGE
2
By your signature and the signature of the Company’s representative below, you and the Company agree that the RSUs awarded to you under this Award Agreement are subject to the terms and conditions of the Plan, a copy
of which is available to you upon request. As provided in the Plan, you hereby agree to accept as binding any decision of the Committee with respect to the interpretation of the Plan and this Award Agreement, or any other matters associated
therewith.
IN WITNESS WHEREOF, the Company has caused these presents to be executed as of __________, 2022.
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MODINE MANUFACTURING COMPANY
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By:
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/s/Neil D. Brinker
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Neil D. Brinker
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President and Chief Executive Officer
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The undersigned hereby accepts the foregoing Restricted Stock Unit Award and agrees to the terms and conditions of this Award Agreement and of the Plan.
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3
Exhibit 31.1
Certification
I, Neil D. Brinker, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended June 30, 2022;
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| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
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| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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| b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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| c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
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| d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
| a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
| b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: August 4, 2022
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/s/ Neil D. Brinker
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Neil D. Brinker
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President and Chief Executive Officer
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Exhibit 31.2
Certification
I, Michael B. Lucareli, certify that:
| 1. |
I have reviewed this quarterly report on Form 10-Q of Modine Manufacturing Company for the quarter ended June 30, 2022;
|
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
|
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
|
| 4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
| a. |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| b. |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| c. |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
|
| d. |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
| 5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions):
|
| a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
|
| b. |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
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Date: August 4, 2022
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/s/ Michael B.Lucareli
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Michael B. Lucareli
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Executive Vice President, Chief Financial Officer
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Exhibit 32.1
Certification
Pursuant to 18 United States Code § 1350
In connection with the quarterly report of Modine Manufacturing Company (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), I, Neil D. Brinker, President and Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. § 1350, that, to the best of my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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Date: August 4, 2022
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|
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/s/ Neil D. Brinker
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Neil D. Brinker
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President and Chief Executive Officer
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This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
Certification
Pursuant to 18 United States Code § 1350
In connection with the quarterly report of Modine Manufacturing Company (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof
(the “Report”), I, Michael B. Lucareli, Executive Vice President, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. § 1350, that, to the best of my knowledge:
| 1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
| 2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
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Date: August 4, 2022
|
|
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/s/ Michael B.Lucareli
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Michael B. Lucareli
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Executive Vice President, Chief Financial Officer
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This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.